China’s integrated circuits truly need “real materials” to achieve real “wealth.”

Over the past 12 years, China has achieved a breakthrough in the field of integrated circuit materials—from having nothing at all to establishing a robust domestic supply chain. According to statistics from the Integrated Circuit Materials Innovation Alliance, China now has more than 150 domestically developed integrated circuit materials that have been put into mass production. Some of these materials have already met customer requirements at the 14nm node, and the number of material types with a single-source procurement ratio exceeding 50% has surpassed 110.

Recently, the 2020 China Semiconductor Materials Innovation and Development Conference (hereinafter referred to as the “Conference”) was grandly held in Hefei. Government leaders at various levels and industry representatives jointly discussed the path forward for the development of China’s domestic semiconductor materials sector.

As Ye Tianchun, chief engineer of China’s National Major Special Project 02, pointed out, during the rapid development of China’s integrated circuit industry, the materials segment has actually not been holding back the overall progress. However, compared to the enormous global semiconductor materials market, China’s entire semiconductor industrial chain still needs to engage in multi-dimensional thinking and work together to narrow the gap between China’s materials sector and its overseas counterparts. Only with solid upstream materials can we truly unlock the full potential and prosperity of the entire integrated circuit industry.

Policy tilt

As the semiconductor materials sector represents a weak link in the industrial chain, accelerating its development clearly requires policy support as a top priority.

In his speech at the conference, Cao Jianlin, former Vice Minister of the Ministry of Science and Technology and Chairman of the Board, pointed out that the materials industry is of paramount importance. The integrated circuit industry is characterized by one generation of products, one generation of processes, and one generation of equipment—each of which rests on a corresponding generation of materials. As China advances toward becoming a science and technology powerhouse, advanced manufacturing materials that epitomize the country’s technological strength should also take the lead and achieve global, integrated development. He further emphasized that the advanced materials industry, being at the very beginning of the industrial chain, particularly needs strong government support. He expressed hope that Hefei could become the nation’s first industrial base for the application and promotion of advanced materials.

Yang Xudong, Deputy Director of the Electronic Information Department of the Ministry of Industry and Information Technology, also pointed out that semiconductors are a strategic national industry, and materials—being upstream in the industrial chain—occupy a strategically central position. In August of this year, the State Council issued a document to promote the development of the integrated circuit industry, under which domestic enterprises meeting the relevant criteria will be eligible for preferential policies. We hope that entrepreneurs will seize the vast market opportunities and development prospects to achieve higher-quality growth in the semiconductor materials industry.

Hefei’s Vice Mayor Wang Wensong specifically stated that, under the dual impact of the global situation and the COVID-19 pandemic, the development of the materials industry requires even greater encouragement and support. Hefei will further introduce complementary policies covering industries, talent, and other areas, providing enterprises with efficient and high-quality services, and working hand in hand with the materials industry for mutual development.

Industry Linkage

In addition to policy support, the coordinated collaboration between upstream and downstream sectors is also a crucial driving force for the development of the semiconductor materials industry. The downstream sector can expand the application areas of its products and closely seize the growing market demand; its technological advancements, in turn, spur vigorous innovation in the upstream materials sector. Moreover, the ramp-up of downstream production capacity will directly create substantial growth opportunities for local upstream material suppliers.

At the conference, Changdian Technology CEO Zheng Li discussed how advanced packaging technologies are driving innovation in the semiconductor materials field. He noted that emerging applications—such as AI and big data—are placing ever-higher demands on chip performance, including high-frequency transmission, low power consumption, excellent thermal management, and superior overall performance. These demands are making integrated circuit products increasingly complex, while also propelling integrated circuit packaging toward higher density and greater precision. This trend, in turn, calls for close collaboration between processes and materials.

Zheng Li pointed out that design processes and material innovations in downstream manufacturing are closely linked. For example, innovations in thermal management materials can optimize both the thermal conductivity and the elastic modulus, while innovations in substrates can reduce the Dk/Df ratio to better accommodate high-frequency chips.

Zheng Li emphasized that the final manufacturing and testing stage of integrated circuits serves as a crucial link in the industrial chain, bridging the past and paving the way for the future. Moreover, collaborative R&D involving the coordinated design of chip circuits, packaging technologies, materials, and systems is becoming increasingly important. For domestic material manufacturers, although the road ahead is long, it is also highly meaningful. Changdian Technology will support material manufacturers in DFX innovation and deep R&D collaboration, and lead local material suppliers to achieve common development.

Cai Huijia, General Manager of Hefei Jinghe, discussed from the perspective of production capacity how industrial synergy can drive the upstream materials sector.

Cai Huijia revealed that Hefei Jinghe’s monthly production capacity has now reached 25,000 wafers, and is expected to reach 30,000 wafers by November of this year. By 2021, the company’s annual production capacity is projected to grow to between 50,000 and 60,000 wafers.

The rapid expansion of Hefei Jinghe’s production capacity has created development opportunities for domestically produced materials. Cai Huijia pointed out that since the company’s establishment in 2015, Jinghe has already been paying close attention to the localization of materials. Currently, in terms of chemicals and gases, Jinghe has achieved a localization rate of 60% to 70%. As its production capacity continues to ramp up, Jinghe will further promote the localization of other materials in the future, such as hydrofluoric acid, sulfuric acid, and silicon wafers.

In his speech, Feng Yaobin, Manager of the Lithography Technology Department at Yangtze Memory Technologies, also pointed out that the company has established smooth and amicable cooperation with its material suppliers. Over the past several years, in the course of collaborating with major domestic material suppliers on R&D, Yangtze Memory has continuously optimized its processes, jointly discussed design solutions, conducted initial field tests at the supplier end, and worked together to develop a rational and efficient verification plan. Subsequently, the company has carried out small-batch testing and expanded process validation sequentially within its own facilities.

Throughout the entire process described above, Yangtze Memory Technologies worked closely with local material suppliers to optimize project materials, ultimately achieving the shared goals of both parties and establishing a strategic partnership. This perfectly exemplifies the driving role that downstream domestic major manufacturers play in the upstream materials segment. It can be said that industrial synergy will play the most effective catalytic role in the development of China’s semiconductor materials sector.

Continuous innovation

Leaving aside external factors, companies’ own investments and innovations are also key drivers of progress throughout the semiconductor materials sector. Taking photoresist as an example, Chen Xin, Chairman of Beijing Kehua Microelectronics Materials Co., Ltd., discussed the current state of development of domestic semiconductor materials.

Chen Xin pointed out that in 2019, among the global regions, mainland China ranked third with a 15% share of semiconductor photoresist sales, and the gap between China and the top two—South Korea (23%) and Taiwan, China (22%)—is steadily narrowing. By 2025, total demand for photoresists in mainland China is expected to exceed 600 million U.S. dollars, with ArF accounting for 298 million U.S. dollars, KrF for 199 million U.S. dollars, I-line for 77.45 million U.S. dollars, G-line for 21.93 million U.S. dollars, and ultraviolet negative photoresists for 63.67 million U.S. dollars.

The market is growing rapidly, yet there remains a significant gap between domestic photoresist supply and the demand from China’s domestic IC production lines. Chen Xin stated that it will take at least another five years for local companies to achieve industrial-scale production of ArF photoresists. Although KrF photoresists have already been industrialized, they will still require three more years to fully meet the requirements of China’s integrated circuit manufacturing processes. As for I-line photoresists, product development meeting domestic process technology standards has already been completed; however, these products will still face challenges in further market expansion.

Chen Xin pointed out that the production of photoresists requires the seamless integration of multiple disciplines, including photochemistry, organic synthesis, polymer synthesis, purification and refining, trace analysis, and performance evaluation. In particular, the backwardness of engineering technologies has become a major technological bottleneck hindering the industrialization of China's photoresist industry. Therefore, the development of photoresists still relies on long-term technological accumulation and continuous innovation.

Technological innovation is inseparable from talent. Chen Xin pointed out that China’s talent pipeline for photoresist materials is still incomplete. Colleges and universities should focus their efforts on cultivating specialized talent, while research institutes should further nurture both scientific and technological talent and engineers through basic research. Only then will enterprises have a wider range of talent options.

Moreover, the development of photoresists also requires greater capital support. Chen Xin pointed out that early-stage R&D for high-end photoresists demands substantial financial investment and has a remarkably long payback period. Overseas photoresist companies that were originally independently operated have increasingly been sold off or acquired through mergers and acquisitions, while some large, diversified corporations have achieved remarkable growth in the photoresist business. Given that domestic enterprises started relatively late and remain comparatively smaller in scale, they need even more robust capital support.