There are two main driving forces for the development of integrated circuits, one is the logic process driven by Moore's dividend, and the other is the characteristic process driven by market segmentation. At the beginning of this year, the first batch of power device products of Huahong Wuxi Project Phase I (Huahong Seventh Factory) under Huahong Group were delivered, marking the successful mass production of the most advanced 12 inch power device platform in Chinese Mainland. Previously, the Jita semiconductor characteristic process production line was officially moved into the first photolithography machine, and the Xiamen Shilan 12-inch characteristic process production line was capped and put into production. On the one hand, the top ten wafer foundries in the world have a layout of characteristic processes, and the competitive pressure cannot be underestimated; On the other hand, the characteristic process has a significant long tail effect, and the market is fragmented and has a large capacity, bringing development opportunities for China's semiconductor enterprises.

Strong players abound in competition

Compared to logical processes based on line width, the competitive ability of characteristic processes is more comprehensive, including multiple dimensions such as process, product, service, and platform. Lv Penghao, an analyst at CCID Consulting, said that the competitive points of featured processes lie in the maturity and stability of the processes, the diversity of process platforms, and the richness of product categories. Industry insider Wang Xiaolong said that the featured process mainly competes with the technical experience, service capabilities, and specialized development capabilities of manufacturers.

Legacy IDM manufacturers often have superior product design capabilities. For example, Infineon's IGBT has achieved 650V, which is applied in fields such as power grids, high-speed rail vehicles, and has higher voltage blocking ability and stability. However, many domestic IGBT manufacturers are difficult to achieve the same voltage blocking capability, focusing on the consumer electronics field with lower added value but below 650V. Similarly, for wafer foundries, whether they can produce components with the same performance at a lower line width determines their process capabilities. Although the characteristic process does not pursue line width, the lower the line width, the more able it is to control batch production costs.

Among the top ten foundry manufacturers in the world in 2019 announced by the Topology Industry Research Institute, TSMC and Samsung ranked 12th in terms of characteristic processes; Due to their inability to catch up with advanced manufacturing processes, Grid Core and Liandian, which ranked 3rd and 4th, suspended further development of manufacturing nodes at 7nm and 12nm nodes, respectively, and shifted their main focus to characteristic processes. High tower, Eastern Hi-Tech, and advanced technologies in the world focus on unique processes. Currently, high tower RF components such as RF-SOI and RF-CMOS, as well as BCD and CIS, have progressed to the 65nm process.

"Large manufacturers such as TSMC also attach importance to characteristic processes. Due to its large size, even if a relatively small proportion of resources are invested in characteristic processes, it cannot be underestimated. Domestic manufacturers have never lacked competition in making characteristic processes," Wang Xiaolong said.

Moving from 8 inches to 12 inches

Moving from 6 inches to 8 inches and from 8 inches to 12 inches is the general direction of wafer foundry. In 2019, Wuxi SK Hercules II Factory was completed and put into production, and it is expected to produce 180000 pieces of 12-inch wafers per month when it reaches its full capacity. The monthly production capacity of the 12 inch production line of Huahong Seventh Factory is planned to be 40000 chips, which is aimed at the needs of mid to high-end chips in emerging application fields such as mobile communication, the Internet of Things, smart home, artificial intelligence, and new energy vehicles. Yuexin Semiconductor's 12-inch chip production line was put into production, using a 130nm to 180nm platform process, focusing on "product differentiation process", targeting high-end analog chips, automotive electronics, biomedical testing, 5G front-end modules, and other product directions.

In addition to investing in factories, there are also manufacturers that have acquired 12 inch capacity through acquisitions. Liandian has been approved to acquire all equity in the 12 inch wafer factory jointly invested with Fujitsu Semiconductor. It is expected that Liandian's 12 inch monthly production will increase by more than 20%.

Mo Dakang, an expert in the semiconductor industry, told reporters that at the current stage, the characteristic process is dominated by 8 inches, with 12 inches being a minority. Most of them are mature processes, and they are divided into OEM, IDM, and non silicon materials. China has advantages in 8 inches OEM, but IDM competitors are all international established manufacturers, making it difficult to break through the advantages. In terms of non silicon materials, Chinese manufacturers started relatively late.

As the process reaches 90-55 nm, 12 inches have higher efficiency compared to 8 inches, but the challenge is not small. Wang Xiaolong said that starting with the 90nm process, 12-inch wafers entered the market. Compared to 8 inches, 12 inches has higher production efficiency and can effectively reduce production costs when the product volume is large. However, the 12 inch production line has higher requirements for process indicators and raw materials. Lv Penghao also stated that the overall cost of the 12 inch feature process is about 80% of that of the 8 inch process. However, the majority of the 12 inch process is new equipment, and the initial investment is large. If the production capacity fails to climb smoothly, it may fall into long-term losses.

At this stage, the advantage of 8 inches is still evident and will coexist with 12 inches for a long time. Mo Dakang stated that 8-inch equipment has advantages such as expired depreciation period, relatively mature and stable technology, and less control over equipment software upgrades by the original factory. At the same time, the linewidth of the 8-inch feature process has also begun to fall below 90nm. For example, Samsung's 8-inch solution includes 65nm eFlash and 70nm display driver ICs. In the future, 12 inch and 8 inch capacity will continue to increase, coexisting for a long time.

Long Tail Effect Brings Market Opportunities

The data shows that the driving forces for the 2020 featured processes are hybrid signal chips, RF ICs, automotive electronics, MEMS sensors, MCU, image sensors, and smart card ICs. It is reported that eNVM is the largest revenue source of Huahong Hongli in 2018, mainly including smart card chips and MCU applications. At the same time, the deployment of 5G cellular networks will significantly increase the demand for RF technology.

New technologies and terminals such as 5G, the Internet of Things, and multi camera mobile phones will continue to inject momentum into the characteristic process market. Wang Xiaolong said that the biggest change in the market demand for characteristic processes in recent years has been the continuous surge in demand, with the demand for wafers for products such as radio frequency communication, power devices, MEMS, CIS, fingerprints, and facial recognition increasing. Silicon carbide high-power devices are an important explosion point in the characteristic process market. The technology is basically mature, and the market is at a critical point of rapid growth. Lv Penghao said that the demand for RF chips for 5G commercial applications, the demand for sensors and Bluetooth chips for the Internet of Things, the demand for power devices and sensors for new energy vehicles, and the demand for image sensors for smartphones and machine vision would all be market explosion points in the future.

"Featured processes have a wider range of technology and products, and there are many long tailed and fragmented markets. There are no absolute standards for craftsmanship, and no single wafer factory can take care of all featured processes