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I: Hello, Teacher Ye! Recently, I keep hearing people talk about semiconductors and chips, but many people, including myself, can’t tell if they are the same thing. Can you explain it to me?
Ye Rongtian: Hello! Actually, these two are easy to distinguish; we can use a metaphor from daily life to understand. Semiconductors are like the basic ingredients for cooking, such as fresh vegetables and meat. They are a type of material that conducts electricity between conductors and insulators at room temperature. Silicon is the most common semiconductor material and is the starting point for all related products. Chips, on the other hand, are the ‘finished dishes’ made from these ‘ingredients’ through complex processes. They integrate tens of millions or even billions of transistors onto semiconductor wafers through steps like photolithography and etching, becoming integrated circuits that can compute and store data. The core components in our phones and computers rely on chips to function. In simple terms, semiconductors are the foundation, while chips are the ‘core products’ made from semiconductors.
I: I see! That metaphor is very vivid! Since chips are so important, what do people mean when they say ‘the lithography machine is a bottleneck’? How critical is it to chip manufacturing?
Ye Rongtian: The lithography machine is indeed the ‘key player’ in chip manufacturing. We can compare it to a surgical knife that performs ‘precision surgery’ on chips. The circuit diagrams on chips are very small, and the lithography machine uses ultraviolet lasers to precisely engrave these diagrams onto the silicon wafer. Its precision directly determines how many transistors can be packed into a chip and how powerful its performance is—higher precision means more transistors, and faster computation speed for the chip.
Why is it called a ‘bottleneck’? On one hand, the technology is very difficult; lithography machines involve many high-end fields such as optics and mechanics. For example, the roughness error of the mirror surface of the most advanced lithography machines is tens of thousands of times finer than a human hair. On the other hand, previously, only ASML in the Netherlands could manufacture the world’s top lithography machines, and due to international policy influences, it was very difficult for us to obtain advanced models. However, there have been breakthroughs domestically; Shanghai Micro Electronics has developed a 28-nanometer immersion lithography machine, with a localization rate exceeding 90%. This year, it has also entered the production line verification of SMIC, and supporting companies like Zhangjiang and Maolai providing optical components are also accelerating, which is gradually breaking the bottleneck.
I: It’s really exciting to hear about the breakthroughs domestically! After chips are produced, there is also a ‘packaging’ stage. Recently, there has been a lot of talk about packaging technology; what exactly does it do, and why is it so important?
Ye Rongtian: Packaging is like putting a ‘protective coat and connecting lines’ on the chip; it is the last critical process before the chip leaves the factory. Think about it, after the chip is cut from the wafer, it is very fragile and easily contaminated or damaged. Packaging must first protect it; additionally, the chip needs to connect with external circuits to function, and packaging uses techniques like wire bonding and flip-chip bonding to connect the chip with external circuits, while also addressing heat dissipation issues—if heat dissipation is poor, the chip’s lifespan will shorten, and its performance will be affected.
Currently, advanced packaging technologies like Chiplet are popular; they help us ‘achieve great things with small investments’: for example, previously, to make a chip more powerful, it had to be made with a very small process, which was very costly; but Chiplet can break complex chips into several smaller chips, some made with mature processes, and when combined, they can still achieve high-density interconnection, reducing costs while improving performance. Domestic companies are also performing well, such as Tongfu Microelectronics, whose Chiplet packaging technology has already been mass-produced, with a net profit increase of 28% year-on-year in the first half of this year and a capacity utilization rate of 88%. Another company, Changjiang Electronics Technology, as an industry leader, along with Tongfu, supports the domestic packaging industry, ensuring that the chips we produce are truly ‘usable and durable.’
I: I didn’t realize packaging had such a significant role! What about something called PCB? It’s often said to be related to chips; what role does it play specifically? Are there any good domestic companies in this field?
Ye Rongtian: We can think of PCB as the ‘nervous system carrier’ of the chip—if the chip is the ‘brain’ of the electronic device, then the PCB is the ‘circuit board’ that carries the ‘brain’ and connects the whole body. All packaged chips, along with resistors, capacitors, and other components, must be soldered onto the PCB, which transmits signals and provides power through the copper foil circuits on the board, effectively bridging the chip to devices like phones, computers, and base stations.
Domestically, there are two leading companies excelling in the PCB field. One is Shenzhen Santek, which is particularly strong in the high-end server PCB sector, with a market share exceeding 20%. In the first half of this year, their PCB revenue increased by 29.21% year-on-year, and their products are used in servers for some large cloud service providers. The other is Unimicron Technology, whose 5G base station PCB products have already been supplied in bulk to Huawei and ZTE; the 5G signals we use daily also owe a lot to their contributions.
I: After your explanation, the entire chain from semiconductors to chips, then to packaging and PCB, is much clearer! What are the main enterprises in the semiconductor industry chain in the A-share market now? How is the progress of domestic production across the entire chain?
Ye Rongtian: The domestic semiconductor industry chain has now formed a clear hierarchy, from ‘sand to silicon wafers’ to ‘chips to terminals’, with key enterprises making efforts in each link, and the process of localization is continuously accelerating.
On the manufacturing side, SMIC is the core; their 14-nanometer process yield has stabilized above 85%, and they can achieve equivalent 7-nanometer performance through multiple exposure technologies. They are currently taking on many domestic replacement orders. On the equipment side, North Huachuang’s 14-nanometer etching machine has passed verification, with equipment orders exceeding 10 billion yuan this year, and they have entered the supply chains of leading companies like TSMC and SMIC. In terms of materials and supporting components, there are companies producing key materials for packaging substrates, and Shenzhen Santek and Unimicron are leading the high-end PCB market.
In short, we now have ‘reliable enterprises’ supporting every link from semiconductor materials, chip manufacturing, to packaging and PCB, and the entire chain is moving towards self-control. Those companies that can achieve breakthroughs in technology are not only key to industrial upgrading but also the focus of market attention—after all, only when every link is strong can the entire semiconductor industry truly ‘stand up and become strong.’
I: Thank you so much, Teacher Ye! After your explanation, the complex knowledge points that I found difficult to understand are now clear, and I have a better understanding of the domestic semiconductor industry situation.
Ye Rongtian: You’re welcome! The semiconductor industry indeed involves many knowledge points, but as long as we use metaphors from daily life to break them down, they are not difficult to understand. The domestic industry is continuously improving, and we can pay more attention to the developments in these fields, and gradually we will be able to keep up with the pace.