China Semiconductor Device Market Size

China Semiconductor Device Market Analysis

The China semiconductor device market is expected to register a CAGR of 9.32% during the forecast period.

• The China semiconductor device market is currently valued at USD 217.01 billion and is anticipated to reach USD 370.40 billion by the end of the forecast period. The outbreak of COVID-19 across the country significantly disrupted the supply chain and production of the studied market in the initial phase of 2020.
• For circuit and chipmakers, the impact was more severe. Due to labor shortages, many of the package and testing plants in the country reduced or even suspended operations. This also created a bottleneck for end-product companies that depended on semiconductors. In Q1 of 2020, the COVID-19 pandemic had a significant impact on the semiconductor industry, leading to various challenges, such as low inventory levels for clients of semiconductor vendors and distribution channels. The effects of the pandemic were felt throughout the supply chain, disrupting production and causing a slowdown in smartphone demand.
• However, as the supply chain gradually recovered in the Q2 of 2020, governments enabled fiscal policies to recover the economy. These factors, combined with the rise of the stay-at-home economy, led to increased restocking demand from downstream clients, boosting semiconductor revenue.
• The pandemic also increased investments in semiconductor equipment to cater to the rising demands from various end-user verticals. For instance, according to Semiconductor Equipment and Materials International (SEMI), the spending on semiconductor equipment in China amounted to USD 29.62 billion in 2021.
• Also, the semiconductor shortage caused by the COVID-19 pandemic prompted players to focus on increasing production capacity. For instance, the Semiconductor Manufacturing International Corp (SMIC) announced aggressive plans to double its production capacity by 2025 by constructing new chip fabrication plants in various cities, including a September 2021 announcement to establish a new factory in Shanghai's free trade zone.
• According to the Ministry of Industry and Information Technology (MIIT), China aims to have 2 million installed 5G base stations in 2022 to expand the country's next-generation mobile network. The Chinese mainland currently has 1.425 million installed 5G base stations that support more than 500 million 5G users nationwide, making it the most extensive network in the world, as per MIIT. The growing implementation of 5G in the country will increase the uptake of 5G-enabled devices.
• In China, the growth of the studied market can also be attributed to the booming electronics industry. Electronics is one of the largest industries in China and is a significant contributor to the country's overall economic growth. For instance, per the State Council of the People's Republic of China, during the two months from January to February 2022, the added value of major electronics manufacturers rose 12.7% year-on-year, compared with the 7.5% growth in the overall industrial sector in the country. China is the world's leading producer of electronic devices such as TVs, smartphones, laptops and PCs, refrigerators, and air conditioners.
• Additionally, several initiatives have been taken in recent years to boost the industry's growth. For instance, during the second pandemic wave, the Chinese government announced plans to expand the domestic market for electronic components to CNY 2.1 trillion (USD 327 billion) by 2023. The program covers components, materials, and manufacturing equipment used in areas such as smartphones, drones, 5G wireless, connected factories, electric vehicles, robotics, high-speed rail, and aerospace. Specifically, the Chinese government is looking to increase the output of semiconductors, sensors, magnets, fiber-optic equipment, and software, among others. Such initiatives create a positive growth outlook for the studied market.
• Further, the growing adoption of cloud computing in the country is another factor boosting the market growth. According to the China Academy of Information and Communications Technology (CAICT), by 2023, the size of China's cloud computing market will reach CNY 375.42 billion (USD 56.31 billion), increasing by 1.8 times compared with that of 2019, and the CAGR from 2019 to 2023 will be as high as 29.5%.