Export Value of Semiconductor Blank Masks to China Increases by 20.28% This Year
As the rapid growth of Chinese foundries continues, domestic companies' exports of key semiconductor materials are on the rise. However, domestic foundry companies are facing challenges with declining utilization rates and price wars due to the influx of Chinese products.
According to data from the Korea Trade Statistics Promotion Institute (TRASS) on Nov. 20, the export value of semiconductor blank masks to China from January to October this year was $16.96 million (about 24 billion won). This marks a 20.28% increase compared to the $14.10 million recorded throughout 2023. Thanks to the supply to China, the annual total export value is expected to reach an all-time high.
Semiconductor blank masks are essential materials for the photolithography process, which prints circuit patterns on wafers using light. In Korea, blank masks used in general-purpose semiconductor processes of 7 nanometers (nm, one-billionth of a meter) or more are mainly produced. The Chinese semiconductor industry lacks the capability to self-supply blank masks, so they are supplied by domestic companies such as S&S Tech. Therefore, the increase in blank mask exports to China is an indicator of how actively China is investing in general-purpose (legacy) semiconductors.
Chinese foundry companies are actively expanding their scale. A representative example is SMIC, the world's third-largest foundry company. This company secured a production capacity of 884,250 8-inch wafer equivalents per month in the third quarter of this year. Despite the strong semiconductor equipment regulations from the United States, production capacity increased by 11% compared to the same period last year.
It is also noteworthy that as production capacity increases, utilization rates are also rising. SMIC's factory utilization rate, which was 77.1% in the third quarter of last year, surpassed 90% in the third quarter of this year. 86.4% of SMIC's semiconductor contract manufacturing clients are headquartered in China. With the U.S. pressure on China and the strong push for the "semiconductor rise" locally, Chinese semiconductor companies are knocking on SMIC's doors.
Chinese legacy companies are securing a competitive edge over Korean companies in terms of price competitiveness by rapidly expanding production capacity and leveraging cheap labor costs. While companies like S&S Tech benefit from the expansion of Chinese foundries, domestic legacy foundry companies such as Samsung Electronics' 8-inch foundry, DB HiTek, and SK Key Foundry are struggling to secure orders and profits. In the case of DB HiTek, the utilization rate, which peaked at 96.74% during the legacy semiconductor supply crisis in 2021, fell to 74.43% in the third quarter.