Editing by Li Panpan
With the wafer production boom underway in China, cleanroom engineering suppliers that can provide new plant construction are meeting new opportunities, JW Insights reported.
Major players in this sector are Wuxi Taiji Industry (with its subsidiary EDRI), CESE2, CESE4, L&K Engineering, United Integrated Services, and BOTH Engineering Technology.
The number of newly built semiconductor projects in China declined in 2019 and 2020 due to geopolitical changes and the pandemic, a factor for the chip shortage. In 2021, surging investments were made in fab expansion by SMIC, SMIC Shaoxing, Changxin Memory Technologies, Yangtze Memory Technologies, TSMC, and Nexchip(晶合集成), benefiting cleanroom engineering suppliers significantly.
EDRI(十一科技), a leading Chinese IC engineering contractor, got no wafer fab project in the first half of 2021 but starting July 2021, it announced many wafer fab projects, each worth more than one billion RMB. These projects helped its parent company Wuxi Taiji Industry(太极实业) gain big profit of RMB 24.267 billion ($3.83 billion), a year-on-year increase of 35.98%.
Cleanroom engineering supplier L&K Engineering(亚翔集成) also won more wafer fabs projects in the second half of 2021. The company said the volume and price of the signed contracts increased, bringing substantial growth in its revenue.
IC manufacturing requires the highest requirements for cleanliness because of its technical nature and process complexity. Its core process area needs to maintain cleanliness grades at 1-4, compared to 5-9 in other industries such as food manufacturing and pharmaceuticals.
In new display panel manufacturing, the higher the generation and the more sophisticated the production process, the more stringent the requirements are for the production environment.
Therefore, semiconductor and display panel projects with large investments are the main clients for cleanroom engineering suppliers.
However, the display panel industry is at a low ebb in investment due to the gradual commissioning of new production capacity and lowering prices of panels, according to industry insiders.
For the construction costs of fabs, about 80% is used in e equipment purchase, and the remaining 20% is for plant construction, including civil engineering, electromechanical installation, cleanroom construction, and supporting facilities. Although the overall market has shown signs of recovery, investors are more cautious than before, and they are mainly interested in production expansion projects.
Most cleanroom engineering has been a quite mature trade, with companies well-experienced in cost control. It is not easy to achieve high-profit margins.
On the whole, the current competition in the cleanroom engineering industry has become white-hot. With the subsequent fluctuations in industry forecast, the investment in wafer fabs and display panel factories will be saturated.
Despite many projects in other industries, the overall budget is not as large as that of fabs and display panel factories. Therefore, the overall market of the cleanroom engineering industry may not be optimistic.
