Opportunities Facing the Industry
In recent years, the development of the integrated circuit industry has revealed some new characteristics, which present a favorable opportunity for the specialized integrated circuit testing sector.
The trend of industrial division of labor is becoming increasingly evident, with the traditional IDM model facing growing pressure.
Global integrated circuit-related enterprises are primarily categorized into two types. The first type encompasses vertically integrated companies that cover integrated circuit design, manufacturing, as well as packaging and testing. Their business models are vertical.
Our focus is on an integrated approach, where we handle every stage of the chip design, manufacturing, packaging, and testing in-house, encompassing the entire semiconductor manufacturing process.
(2) The Rise of Chipless Integrated Circuit Business Model
The so-called Chipless model refers to brand companies like Apple and Huawei, which possess vast terminal product markets, and simultaneously master both the front-end chip design and the back-end application, two critical links.
The business model of outsourcing the middle processes, including chip manufacturing, packaging, and testing, to contract manufacturers.
In the Chinese mainland market, the rise of Chipless technology is particularly evident. Enterprises like Gree, Alibaba, Xiaomi, and Midea, among others, are actively entering the chip design industry, making substantial investments in applicable technologies.
In the development and design of proprietary chips and system-on-chip (SoC) for our own products, the goal is to reduce dependence on traditional IDM model companies, thereby diminishing the market share of third-party testing enterprises.
Further expansion is beneficial for the company's development.
(3) Chinese mainland wafer fabs increase investment efforts
The rapid expansion of production capacity is benefiting from the trend of the semiconductor industry accelerating its shift to mainland China. As the global consumer market for semiconductor terminal products, international production capacity is continuously shifting to mainland China.
The shift of wafer manufacturing to mainland China is evident, indicating a trend towards localization, which will be beneficial for the development of the wafer testing industry.
(4) Mainland China's chip design companies enter a period of significant growth
Testing demands have been following the development in recent years. The integrated circuit testing industry has been rapidly growing. According to the statistics from the IC Design Division of the China Semiconductor Industry Association, as of November 2019, the mainland of China...
IC Design Companies Reach 1,780, Up 82 from 1,698 in 2018; China's Chip Design Industry Experiences Rapid Growth. However, third-party testing accounts for the entire integrated circuit industry...
The scale remains small and is unable to meet the growing verification analysis and mass production testing demands of IC design companies. This situation has increasingly become a bottleneck for the development of China's integrated circuit industry.
(5) The testing costs for chips are showing a significant upward trend.
Since 2017, the emergence of emerging terminal applications such as big data, cloud computing, artificial intelligence, new energy vehicles, and blockchain has led to a simultaneous surge in various new demands in the semiconductor industry.
The trend has become more pronounced in the new uptrend cycle, fueled by the 5G construction boom and the rise of wearable devices in May 2019.
Challenges Faced in the Industry
The integrated circuit testing industry is facing a variety of challenges. How to address these challenges is a problem that integrated circuit testing companies must strive to overcome.
Industry-wide, there remains a shortage of experienced and professional talent.
The integrated circuit testing industry requires experienced and highly skilled professionals. After years of development, our country has accumulated a pool of talents. However, due to the relatively short history of the industry and the technology involved,
Our level is relatively low, and the cultivation cycle for talents is lengthy. Compared to international integrated circuit testing enterprises, there is still a shortage of specialized personnel.
(2) International competitiveness needs enhancement.
Leading integrated circuit testing companies in the international market have undergone decades of development, maintaining long-term and close partnerships with the upstream and downstream of the industry chain, and customer relationships that are the result of long-term cooperation.
A sense of recognition exists that domestic companies in the same industry are still in a phase of learning and growth, and there remains a technological gap compared to foreign giants.
