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China-based IC production to represent 21% of China IC market in 2026

IC production in China represented 16.7% of its US$186.5 billion IC market in 2021, up from 12.7% 10 years earlier in 2011, according to IC Insights. The share is forecast to increase by 4.5pp from 2021 to 21.2% in 2026, or a 0.9pp per-year gain on average, said the research firm.

A very clear distinction should be made between China’s IC market and China’s indigenous IC production. Although China has been the largest consuming country for ICs since 2005, it does not necessarily mean that large increases in IC production within China would immediately follow, or ever follow.

Of the US$31.2 billion worth of ICs manufactured in China last year, China-headquartered companies produced US$12.3 billion (39.4%), accounting for only 6.6% of the country’s US$186.5 billion IC market. TSMC, SK Hynix, Samsung, Intel, UMC, and other foreign companies that have IC wafer fabs located in China produced the rest, IC Insights noted.

And of the US$12.3 billion in ICs manufactured by China-based companies last year, about US$2.7 billion was from IDMs and US$9.6 billion was from pure-play foundries like SMIC, IC Insights continued.

If China-based IC manufacturing rises to US$58.2 billion in 2026 as IC Insights forecasts, China-based IC production would still represent only 8.1% of the total forecasted 2026 worldwide IC market of US$717.7 billion. Even after adding a significant markup to some of the Chinese producers’ IC sales (many Chinese IC producers are foundries that sell their ICs to companies that re-sell these products to the electronic system producers), China-based IC production would still likely represent only about 10% of the global IC market in 2026, according to IC Insights.