China: Fab Boom Or Bust?

By Mark LaPedus

China’s semiconductor industry continues to expand at a frenetic pace. At present there are nearly two dozen new fab projects in China.

Whether all these fab projects get off the ground is not entirely clear because the dynamics in China remain fluid. What is clear is the motivation behind this building frenzy—China is trying to reduce its huge trade imbalance in ICs. The country continues to import a large percentage of its chips from foreign vendors.

The Chinese government wants to produce more chips within China, and it also wants to keep closer tabs on those ICs for security reasons. As part of the plan, China has lured several multinational chipmakers to build new fabs inside its borders. For multinational chipmakers, the attraction is the ability to get closer to an enormous customer base. GlobalFoundries, Intel, Samsung, SK Hynix, TSMC and UMC all are building new fabs or expanding their existing plants in China.

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