China‘s analog IC industry is currently in a catch-up phase. Compared to digital chips, domestic analog IC companies started later but have developed rapidly in recent years. The domestic analog IC market has exceeded 150 billion yuan, but the localization rate is less than 30%, with most market share still occupied by international giants such as Texas Instruments, ADI, and NXP.

Domestic analog IC companies are mainly concentrated in the fields of power management, signal chains, and driver chips. In terms of technology, most companies focus on the 90nm-0.18μm nodes, which still lags behind international advanced levels. In the high-end product sector, such as high-precision operational amplifiers and high-performance digital-to-analog converters, domestic companies are relatively weak in competitiveness.

Specific Impacts of the Origin Policy

The recent “origin” recognition new regulations released by the China Semiconductor Industry Association designate the wafer fabrication location as the product’s origin. This policy has profound implications in the current trade environment:

First, the cost advantage is more pronounced. A report from CCB International indicates that trade frictions have led to an overall increase in costs, giving products fabricated in China a better cost advantage. Analog ICs typically have mature process nodes and are highly sensitive to costs, thus benefiting significantly.

Second, order backflow is increasing. Some American chips have raised prices due to tariffs, leading customers to prefer domestic alternatives. This will directly drive order growth for domestic analog IC companies. In fact, semiconductor equipment export data has already shown a 15.6% year-on-year increase in export value for January-February this year, indicating that the industry chain is shifting.

Third, the localization of the industry chain is accelerating. The new regulations allow products fabricated in China to be clearly labeled as “Made in China,” avoiding previous ambiguities in recognition standards. This will encourage more design companies to choose domestic foundries, forming a more complete industrial ecosystem.

Analysis of Benefiting Companies

Based on stock market performance and industry characteristics, the following types of companies will benefit significantly:

1. IDM Model Companies: Hua Hong Semiconductor, as a well-established IDM company, focuses on specialty processes and analog IC manufacturing, with its stock price having risen over 15%. Hua Hong has significant advantages in power devices and MCUs, and the new regulations will make it easier to attract international customers for localized production in China.

2. Analog IC Design Companies: Companies like Sanken Electric and Aiwai Electronics, which focus on analog IC design, will benefit directly. These companies primarily produce power management and audio amplifier analog chips, which were mostly outsourced overseas, but now have stronger incentives to shift to domestic foundries.

3. Specialty Process Foundries: Foundries like SMIC and Shanghai Huahong that provide specialty processes will receive more orders. Analog ICs typically use specialty process technologies, such as BCD processes and high-voltage processes, which are relative strengths of Chinese foundries.

4. Automotive-grade Analog Chip Companies: Under trade conflicts, the supply security of automotive-grade chips is receiving more attention. Companies like Guoxin Technology and Zhongying Electronics that are involved in automotive-grade analog ICs will gain more opportunities. Currently, the localization rate of analog ICs in the automotive electronics field is low, with significant potential for import substitution.

In the long term, this policy will promote faster growth of China’s analog IC industry. According to SEMI, the annual compound growth rate of China’s wafer capacity is expected to reach 8.1% over the next four years, higher than the global average of 5.3%.

As a relatively mature field, analog ICs will become a focus for domestic substitution. Especially in application scenarios such as industrial control, consumer electronics, and automotive electronics, the market share of domestic analog ICs is expected to increase from the current less than 30% to over 40%.

However, breakthroughs in the high-end analog IC sector will still require time. Products like high-precision amplifiers and high-performance converters rely on fine processes and long-term design experience accumulation, and domestic companies need to continue investing in R&D to narrow the gap.

Overall, the new regulations designating the wafer fabrication location as the origin will accelerate the growth of China’s analog IC industry, promote the localization of the industry chain, and bring substantial development opportunities to related companies.