"Sci-Tech Innovation Board Daily," Nov. 21 (Reporter Wu Xuguang)   "Global semiconductor sales are gradually emerging from a downturn, paving the way for new opportunities in industry development," said Chen Nanxiang, Chairman of the China Semiconductor Industry Association, at the recently held 21st China International Semiconductor Expo (hereafter referred to as the Expo).

Benefiting from the ongoing wave of domestic wafer fab construction and the increasing share of domestically produced semiconductor equipment in Chinese-funded fabs, the semiconductor equipment industry continues to thrive. According to third-party market data, domestic semiconductor equipment sales revenue is expected to grow by 35% in 2024, surpassing 110 billion yuan in size.

At the expo, Wang Fuguo, General Manager of Guangdong Kezhuo Semiconductor Equipment Co., Ltd. (hereinafter referred to as "Kezhuo Semiconductor"), a domestic manufacturer of post-process semiconductor equipment, was interviewed by a reporter from the STAR Market Daily. He stated, "Currently, China's semiconductor equipment industry is at a critical period of development opportunity."

"Jumping the Gun" in the Semiconductor Wafer Cutting Race

Driven by factors such as market dynamics, national strategies, and the need for industrial self-reliance and control, China has become the world's largest semiconductor equipment sales market—and continues to maintain an expansionary trend.

According to third-party market data, domestic semiconductor equipment sales revenue is projected to grow by 35% in 2024, surpassing 110 billion yuan. Among these, the Chinese market for wafer dicing machines has already reached a total of $2 billion, with expectations that it will climb to $3.5 billion by 2027, reflecting a compound annual growth rate of 15%.

"The domestic semiconductor market is vast, yet many critical pieces of equipment must be imported from abroad, posing a significant risk to the industry's stable growth," said Wang Fuguo. He added that, taking wafer dicing machines as an example, aside from a handful of domestic manufacturers like Kozhong Semiconductor, 95% of China's wafer dicing machines still rely on imported equipment from foreign giants such as Japan's DISCO and Tokyo Seimitsu.

"Currently, self-reliance and control over the industrial chain, along with cost reduction and efficiency improvement for companies, are the dominant trends in the industry. Meanwhile, domestically produced equipment and materials offer advantages such as a stable supply chain, lower investment costs, and faster service responsiveness," said a market expert specializing in wafer dicing films.

Founded in 2016, Kezhuo Semiconductor specializes in the research, development, and manufacturing of advanced semiconductor packaging and testing equipment. Its product portfolio includes wafer dicing machines, pick-and-place systems, and inspection devices, among others.

Speaking candidly about using wafer dicing machines as a starting point for his venture, Wang Fuguo revealed that back in 2017, Kozhoo Semiconductor officially launched its R&D project focused on semiconductor manufacturing equipment—back then, the rationale behind this decision was "the domestic market has ample growth potential."

In Wang Fuguo's view, China's current market share for wafer dicing machines still has room to grow compared to the global market, which is valued at tens of billions of dollars. "Looking ahead, it's an inevitable trend—and also the necessary path for domestic startups operating in the semiconductor wafer dicing downstream processes—to replace foreign-funded equipment manufacturers and achieve full-chain, self-reliant, and controllable supply. This is the only way to address the critical 'bottleneck' challenges plaguing the industry."

Based on this assessment, Kozuo Semiconductor has been investing in R&D for technologies such as wafer dicing since 2017, and has established testing collaborations with semiconductor packaging companies.

Wang Fuguo explained that, in terms of its technological strategy, the company adopts an R&D approach centered on "integrating high-dimensional with low-dimensional technologies," starting with the development of the most technically challenging 12-inch fully automated, dual-axis wafer dicing machine. After successfully developing China's first 12-inch fully automated wafer dicing machine in 2018, the company has since gradually expanded its product line to include 8-inch and 6-inch models.

After nearly a decade of product iteration and upgrades, Currently, Kezhuo Semiconductor's wafer dicing equipment achieves cutting precision within 2 micrometers, enabling the company to offer a range of advanced packaging solutions, including wafer dicing machines, IC final-cutting systems, high-speed sorting machines for finished products, and FC flip-chip die attach machines. It now has the foundation to compete with international companies in the wafer-cutting field.

At the expo, Kozho Semiconductor brought multiple 12-inch and 8-inch fully automated, dual-axis wafer dicing machines to the event. "This equipment enables 12-inch wafer cutting with precision within 2 microns," explained Wang Fuguo as he pointed to one of the machines. "It boasts exceptional stability, outstanding cost-effectiveness, and a short delivery timeline—making it perfectly suited for both conventional and advanced packaging processes."

Regarding the progress of the new product, it was reported that, as of now, Kozuo Semiconductor has established cooperative relationships with nearly 20 leading semiconductor packaging customers in China, spanning sectors such as storage chips and power chips. Notably, DEMO orders have already been signed with close to half of these clients. "Going forward, we will continue to finalize new partnerships with additional downstream manufacturers across China, laying a solid foundation for securing official orders in the near future."

Domestic semiconductor equipment enters a period of opportunity.

"China's integrated circuit industry is now steadily establishing a complete industrial chain—from materials and design to manufacturing and packaging/testing—achieving robust self-reliance and control, while accelerating the localization process," said Chen Nanxiang, Chairman of the China Semiconductor Industry Association, at the expo.

The reporter from the STAR Market Daily noted that semiconductor industry players such as HuaHong Group, Northern Hi-Tech, CR Micro, and Yutai Micro also attended the conference. Benefiting from factors like the industry’s recovery and rising market demand, several semiconductor companies have shown clear signs of improving performance this year.

In terms of net profit, HuaHong Corporation saw its third-quarter net margin increase by 226.62% year-on-year; Northern Hi-Tech's third-quarter net profit attributable to shareholders rose 55.02% compared to the same period last year; and Yutai Micro reported a 44.76% year-on-year increase in its third-quarter net profit attributable to shareholders.

Wang Fuguo, General Manager of Kezhuo Semiconductor, told an interview with reporters from the Science and Technology Daily, "Typically, semiconductor inventory cycles last about three years. The previous peak occurred roughly in the second and third quarters of 2023. As global inventories are now being digested, some sub-sectors have already begun restocking ahead of schedule, driving prices to gradually rise and entering an upward trajectory."

Wang Fuguo believes, "China's semiconductor equipment industry is currently at a critical period of development opportunity."

In its view, there are two reasons: First, the rapid growth of artificial intelligence has created unprecedented opportunities for the semiconductor industry—particularly as the accelerated development of AI servers drives up demand for wafer dicing and advanced packaging technologies. Second, from a market perspective, the expansion of new production capacity is continuously boosting demand for semiconductor equipment.

With the application of new technologies such as artificial intelligence and advanced packaging techniques, the semiconductor equipment industry may see a boost in development.

Regarding the market prospects for domestically replacing semiconductor equipment, another electronics packaging industry expert in Beijing noted that currently, AI technology is driving growth in the semiconductor equipment market. Currently, TSMC is the primary supplier for chip packaging in AI servers, while companies like NVIDIA are also vying for product capacity. However, critical areas such as advanced packaging continue to face supply shortages. ”