Globalfoundries recently made a media splash in announcing a reported $10 billion fab investment for Chengdu, China, but there are dozens of other semiconductor manufacturing projects being developed in the country as well, and China is set to become the leading market for semiconductor equipment demand in the next few years.

In a Semiconductor Engineering report, Robert Maire, of Semiconductor Advisors LLC, was cited as saying that China is likely to soon surpass Korea and Taiwan in fab spending and the country is projected to be the top spending region for fab equipment in 2019 and 2020. This rise in the ranking would come quickly, as China only joined Taiwan and Korea in 2016 as a top three spender, according to SEMI.

Globalfoundries recently announced that it formed a partnership with the Chengdu municipality to build a 300mm fab to support growth in the China semiconductor market and meet accelerating global customer demand for 22FDX. The fab will begin production of mainstream process technologies in 2018 and then focus on manufacturing Globalfoundries' commercially available 22FDX process technology, with volume production expected to start in 2019.

But the Globalfoundries project is only one of many in China.

Yangtze River Storage Technology (YRST), Fujian Jin Hua Integrated Circuit, and a joint venture set up by GigaDevice Semiconductor and the Hefei city government of China's Anhui province, are all gearing up to compete in the DRAM field and all are looking to become China's largest DRAM producer. YRST is being supported by China's state-backed tech conglomerate Tsinghua Unigroup. The Tsinghua Unigroup has also been mentioned as having interest in investing in Toshiba's memory business.

According to SEMI, between 2017 and 2020, 26 facilities and lines will begin operation in China, about 42% of the worldwide total currently tracked by SEMI. In comparison, the Americas will have 10 facilities, and Taiwan with have nine.

Spending in foundry and memory segments and for 200mm fabs is forecast to be strong, SEMI noted. For 200mm fabs, the investment activity is driven in part by rising domestic demand for mature nodes and the government's plan to increase IC self-sufficiency rates. Fab equipment related spending in China could be propelled to over US$10 billion or more per year by 2018, and remain at the level over several years, SEMI said.

This build up has caught the eye of China's neighbors. At the end of last year, Taiwan Semiconductor Manufacturing Company (TSMC) chairman Morris Chang commented that the expanding production capacity for 28nm and other more mature process technologies could pose a threat to TSMC.

From 2004 through 2014, over US$70 billion was spent on semiconductor equipment and materials in China, with assembly and packaging infrastructure showing particular growth. However, the installed fab capacity in China represented less than 10% of the worldwide total by the end of 2014 and China-based manufacturers lagged overseas counterparts in leading-edge fab process capabilities.

So in 2014 the China central government issued guidelines to support and promote the creation and development of an indigenous IC industry in China. The national guidelines directed the development of China's semiconductor industry so manufacturing capabilities across the supply chain would reach leading-edge capabilities comparable to international levels. The China government now considers the IC industry as a strategic, fundamental and leading industry.

Moreover, in contrast to recent years where investments by overseas companies represented a majority of the fab investments in China, China "champions" are now emerging as the dominant investment drivers, likely representing over two-thirds of the fab investment activities by 2019 and beyond, SEMI noted.