China's semiconductor consumption growth continued to far exceed worldwide semiconductor market growth. Explore the top finding on each topic below. Click on a tab to learn more.
China’s reported 2016 semiconductor industry revenue growth continued to exceed both China’s semiconductor consumption and the worldwide semiconductor market growth. China’s semiconductor industry grew by 10.9% in 2016 to a record US$99.0bn. China’s semiconductor industry has grown at an equal or greater rate than its semiconductor market consumption for nine of the past ten years. From 2006 through 2016 China’s semiconductor industry grew at a ten year compound annual growth rate (CAGR) of 13.6% while its semiconductor consumption grew at a 12.0% CAGR and the worldwide semiconductor market at a 3.2% CAGR. China’s share of the worldwide semiconductor industry is continuing to grow and become significant. Compared to the sum of worldwide semiconductor device sales revenue plus the value of all wafer fabrication and packaging, assembly and test production, China’s 2016 semiconductor industry revenues accounted for 17.8% of the worldwide semiconductor industry up from 16.2% in 2015,13.4% in 2014,12% in 2013 and 11.6% in 2012.
The overall performance of China’s IC industry (the sum of IC design, IC wafer manufacturing, and IC packaging and testing) continued to be the major contributor to China’s overall semiconductor industry growth in 2016. It grew by 13.6% in 2016 while China’s O-S-D industry revenue only grew by 6.0%. Since 2010 China’s IC industry revenues have more than tripled, growing 207%, while China’s O-S-D industry revenues only increased by 101%. China’s 2016 IC industry revenues of $65.3bn were nearly twice their O-S-D revenues of $33.7bn.
For the sixth year in a row China’s 2016 O-S-D industry growth exceeded worldwide O-S-D industry growth. China O-S-D industry revenues grew 6.0% in 2016 to $34bn while worldwide O-S-D revenues only grew by 1.9% to $68bn. (Within the sector, China’s LED revenues grew to $13.3bn while discrete device revenue increased 8.9% to $20.0bn). China’s reported O-S-D production unit output increased by 12.8% while average selling prices (ASPs) decreased almost 0.5% during 2016. Since 2010 China’s O-S-D industry revenue has grown at the expense of worldwide industry revenues, growing by $16.9bn while worldwide revenues only increased $14.8bn. Based upon revenue values, China's reported O-S-D industry was able to maintain self-sufficiency for the seventh consecutive year in 2016 with an overall self-sufficiency ratio of about 101% (ratio of production versus consumption values).
China’s IC industry revenue growth continued to exceed the worldwide IC market growth again in 2016. China’s IC industry revenues increased 13.6% in 2016 to $65.3bn while worldwide IC revenues increased by just 3.8% to $297.7bn. Starting from a very small $2.2bn base in 2000, China’s IC industry has grown much faster than the worldwide IC market for every subsequent year except 2010 (when it grew 30% versus a worldwide market recovery of 33%). During the 16 year period from 2000 through 2016 China’s IC industry revenues have increased $63.0bn or 2776% while the worldwide IC market increased $108bn or 57%. Since 2000, China’s IC industry growth has accounted for 58% of total worldwide IC market growth.
The distribution of China’s semiconductor industry revenue continued its gradual increase of the IC sectors in 2016. Over the past ten years from 2006 through 2016 the once small IC design sector has grown at a 26.6% CAGR, while the larger IC packaging and test sector at a 14.2%; the smaller IC manufacturing sector at a 15.4% and the much larger O-S-D has only grown at a 14.1% CAGR. As a result, China’s three IC industry sectors have grown from 53.4% to 65.9% of China’s total semiconductor industry.
During 2016 IC manufacturing and IC design grew 18.4% and 17.4%, while IC packaging and test only grew 6.9%, and O-S-D 5.9% slightly changing their relative share but changing the order of their distribution (moving IC design ahead of IC packaging and testing) which became:
China had reported a notable reversal of growth in its IC consumption / production gap in 2015. For the first time since 2009 and for only the second time since 1999, China’s IC consumption / production gap decreased in 2015. That decrease continued in 2016. This gap is the yearly difference between IC consumption and IC industry revenues. Based upon China Semiconductor Industry Association (CSIA) industry statistics this annual gap decreased by US $ 3.1bn (2.6%) in 2016 to $115bn, but it is now forecast to remain relatively constant for each of the following three years. However, the ratio of China’s IC production revenue to IC consumption continues to show improvement. It has grown from 17% in 2001 to a peak of 36% in 2016 and is now expected to increase to 49% by 2019 (which is up from the 38% CSIA had forecast for 2018 a year ago).
China TMT Leader and Private Equity Group Central China Leader, PwC China, PwC China
Tel: +86 21 2323 3362
Partner, Global Technology Leader, PwC United States