In the annual China IC Leadership Summit held on March 30, Wei Shaojun, a leading Chinese semiconductor scholar from Tsinghua University's School of Integrated Circuits, shared his observation on Chinese chip design sector.
As Chinese tech media Ijiwei reported, Wei noted the lack of innovation in China's semiconductor industry. Based on the financial data of the 22 listed IC design companies on the Shanghai Stock Exchange STAR Market, for example, their average gross margin in 2021 was 46.9%, lower than the average 62% among US-based semiconductor companies.
Moreover, their average R&D share of revenue was 25.5%, higher than the average of 17% among US chip companies. Though the data reflect the importance placed by the Chinese chip design industry on R&D, the combined R&D expenditures of the 22 companies are still limited, amounting to US$1.1 billion in total.
Overall, China's fabless chip design sector remains small when compared to that of the US and Taiwan. DIGITIMES Research estimates that China's entire fabless chip design industry saw US$31.5 billion in revenue as of 2022, amounting to 5% of the global chip design (fabless + IDM) revenue. In comparison, the US and Taiwanese fabless chip design sectors respectively saw US$135.5 billion and US$39.8 billion in revenues, accounting for 24% and 7% of global chip design (fabless + IDM) revenue.
As DIGITIMES Research estimates, the United States retains the most competent IC design industry, aided by a complete scientific research ecosystem, the CHIPS Act, and the sanctions against China's HPC industry. However, China's rise will inevitably weaken US market share in the chip design sector: DIGITIMES Research estimates that the global market share of the US chip design industry will drop from 63% in 2022 to 60% in 2026.
