Research and Analysis of China Optical Chip Industry Chain Atlas in 2024

In-depth analysis of China's optical chip industry chain map in 2024

In the wave of rapid iteration of information technology, the demand for high-speed, high-efficiency, and low-energy data transmission in data centers is becoming increasingly urgent, which has injected strong development momentum into the optical chip industry. As the core component of optical devices, optical chips are like the "heart" of optical communication systems, and their performance directly determines the speed and quality of information transmission. In recent years, domestic optical chip manufacturers have made continuous breakthroughs in multiple subdivided product fields with continuous technical research, gradually breaking the monopoly pattern of foreign enterprises, and laying a solid foundation for the independent and controllable optoelectronic industry in our country.

1. Panorama of the industrial chain: a complete ecology from core materials to multiple applications

China's optical chip industry chain is like an interlocking "optical information transmission chain", the upstream is the "basic supply layer" to ensure chip production, the midstream is the "core manufacturing layer" that determines the technical height, and the downstream is the "application landing layer" that releases industrial value.

Upstream link: focus on the two core sectors of raw materials and production equipment. In terms of raw materials, including semiconductor materials such as indium phosphide substrates and gallium arsenide substrates, industrial gases, packaging materials, metal targets and other auxiliary materials, the purity and performance of these materials directly affect the optoelectronic characteristics of optical chips; In terms of equipment, it is represented by lithography machines, etching machines, and epitaxial equipment, which are the key guarantees for the precision manufacturing of optical chips, and their technical level determines the process accuracy and production efficiency of chips.

Midstream link: It is the core manufacturing field of optical chips, which can be divided into laser chips and detector chips according to different functions. The laser chip is like a "light source generator", responsible for converting electrical signals into light signals; The detector chip is like an "optical signal receiver", which undertakes the important task of reducing the optical signal to an electrical signal, and the two cooperate to complete the transmission and conversion of optical information.

Downstream link: The application scenarios of optical chips are extremely extensive, extending from the traditional optical communication field to consumer electronics, automotive electronics, industrial manufacturing, medical and health and other diversified fields. In optical communication, it is the core component of optical fiber communication system; in consumer electronics, it provides support for high-speed data transmission of smartphones and tablets; In the field of automotive electronics, it helps the accurate perception of intelligent driving equipment such as on-board lidar, showing strong industrial penetration.

2. Upstream analysis: the "battlefield" of materials and equipment

1. Industrial gases: the "invisible cornerstone" of chip manufacturing

(1) Market size: steady expansion driven by demand

Since the beginning of the 21st century, with the rapid rise of our country's manufacturing industry, the market demand for industrial gases as basic chemical raw materials has continued to rise. In the process of optical chip manufacturing, industrial gases are used in key links such as wafer cleaning, doping, and etching, and their purity and stability directly affect the yield of chips. According to data from the China Business Industry Research Institute, the size of China's industrial gas market in 2022 will be about 196.4 billion yuan, a year-on-year increase of 9.23%; In 2023, it will further increase to 212.9 billion yuan, showing a steady growth trend. Analysts predict that the market size will reach 229.5 billion yuan in 2024, and with the continuous expansion of high-end manufacturing industries such as optical chips and integrated circuits, the growth momentum of the industrial gas market will be more abundant.

(2) Key enterprises: the rise of local forces

our country's industrial gas industry has formed a number of competitive enterprises, Jinhong Gas, Kemet Gas, Huate Gas, Zhengfan Technology, Heyuan Gas, Qiaoyuan Co., Ltd., CSSC Special Gas, Chendian International and other enterprises have their own advantages in different segments. Among them, Huate Gas has achieved breakthroughs in the field of electronic-grade ultra-high purity gases, and some products have passed the certification of top international semiconductor companies, breaking the monopoly of foreign companies; Jinhong Gas provides one-stop gas solutions for optical chip manufacturers with a complete gas supply chain and has become an important force in the field of local industrial gases.

2. Packaging Materials: The "Last Barrier" to Chip Performance

(1) Packaging substrate: the "multi-functional carrier" of the chip

The packaging substrate is the "bridge" between the optical chip and the external circuit, with multiple functions such as electrical connection, physical protection, and heat dissipation support. It can realize the multi-pin design of the chip, greatly reduce the package size, and improve the electrical performance and heat dissipation of the chip, providing key support for ultra-high-density or multi-chip modular packaging. In this field, local enterprises such as Shennan Circuit and Xingsen Technology have a certain production capacity through technology accumulation, and the product performance is gradually approaching the international level, providing a strong guarantee for the localization of optical chips.

(2) Bonding wire: the "conductive nerve" inside the chip

The bonding wire is a microscopic metal wire that connects the internal circuit of the optical chip with the lead frame, with a diameter of only a dozen microns to tens of microns, which can be called the "capillaries" of the chip. According to different materials, it can be divided into non-alloy wire (gold wire, silver wire, copper wire, aluminum wire) and alloy wire (gold-plated silver wire, copper-plated bonding wire, etc.). For a long time, our country's bonding wire market has been dominated by international manufacturers such as Germany's Heraeus, South Korea's Mingkaiyi, Japan's Nippon Steel, Tanaka Precious Metals, etc., and the products of local manufacturers are mostly concentrated in low-end fields, and the type is relatively single. However, Yantai Yinuo Electronics, Wansheng Alloy and other enterprises have achieved breakthroughs in the field of copper wire, aluminum wire and other products through technological innovation, gradually breaking the international monopoly and providing more options for low-cost packaging of optical chips.

3. Lithography machines: the "precision engravers" of chip manufacturing

(1) Global market size: growth trend driven by new demand

Despite the relatively sluggish demand for consumer electronics, the rise of emerging fields such as electric vehicles, wind and solar storage, and artificial intelligence has injected new growth momentum into the semiconductor industry and driven the steady development of the lithography machine market. As the core equipment of optical chip manufacturing, the technical level of lithography machine directly determines the process accuracy of the chip. According to SEMI data, the global semiconductor equipment market size in 2022 will be US$107.65 billion, of which the lithography machine market will account for about 24%, reaching US$25.84 billion; In 2023, it increased to $27.13 billion. Analysts at the China Business Industry Research Institute predict that the global lithography machine market will further grow to $31.5 billion in 2024, showing strong development momentum.

(2) Competition pattern: local breakthrough under oligopoly

The global lithography machine market presents a highly oligopolistic pattern, with ASML in the Netherlands, Canon in Japan, and Nikon in Japan occupying the vast majority of the market share, of which ASML leads the absolute leadership with a market share of 82.1%, and Canon and Nikon account for 10.2% and 7.7% respectively. In China, Shanghai Microelectronics is currently the only enterprise in China with the R&D and manufacturing capabilities of lithography machines, and its products have the manufacturing capacity of chips of 90nm and below, and the previous shipments have accounted for more than 80% of the domestic market share, providing key equipment support for the independent production of semiconductor devices such as optical chips in our country.

4. Etching machine: the "fine processing tool" of the chip process

(1) Global market size: continuous growth driven by technological upgrades

The etching machine is a key equipment used for pattern transfer in the optical chip manufacturing process, and its performance directly affects the pattern accuracy and structural integrity of the chip. Driven by the vigorous development of the terminal application market and the upgrading of semiconductor manufacturing technology, the market size of etching machines continues to expand. According to data from the China Business Industry Research Institute, the global etching equipment market size reached US$13.99 billion in 2022, a year-on-year increase of 6.3%; In 2023, it increased to $14.82 billion. Analysts predict that the global etching equipment market size will further grow to $15.18 billion in 2024, and the market demand for etching machines will continue to rise as optical chips develop towards higher speeds and smaller sizes.

(2) Key enterprises: cluster breakthroughs of local enterprises

our country has formed a number of competitive enterprises in the field of etching machines, such as North Huachuang, China Micro Corporation, China Electric Technology, Beijing Chuangshi Weiner Technology, Yitang Semiconductor, Beijing Jinsheng Micro-Nano Technology and Shiyuan and other enterprises have their own focuses on different types of etching machine products. Among them, China Micro Company has made a major breakthrough in the field of dielectric etching machines, and its products have been applied to the production of chips in international advanced processes; With a complete etching machine product line, North Huachuang provides a full range of equipment support for optical chip manufacturing enterprises, promoting the localization process of etching equipment in our country.

3. Midstream analysis: the "innovation highland" of optical chips

1. Global market size: a golden track for rapid growth

As the core component of the optical communication industry, optical chips are growing rapidly with the continuous advancement of global informatization. According to LightCounting data, the global optical chip market size will be US$2.7 billion in 2022, and analysts at the China Business Industry Research Institute predict that this scale is expected to grow to US$5.6 billion by 2027, with a compound annual growth rate (CAGR) of 16%, showing broad room for development. This growth is mainly due to the rapid development of 5G communications, data centers, artificial intelligence and other fields, and the demand for high-speed optical chips has grown explosively.

2. Chinese market size: scale expansion under the acceleration of localization

Benefiting from the continuous advancement of optical chip localization, as well as the renewal of a large number of data center equipment and the construction of new data centers, China's optical chip market has become one of the fastest growing regions in the world. According to data from the China Business Industry Research Institute, the market size of China's optical chips in 2022 will be about 12.484 billion yuan, a year-on-year increase of 14.83%; in 2023, it will increase to 13.762 billion yuan. Analysts predict that the market size will further grow to 15.156 billion yuan in 2024, and with the continuous improvement of the technical strength of domestic manufacturers, the growth potential of China's optical chip market will be further released.

3. Localization rate: the development pattern of gradient breakthrough

The localization process of optical chips in our country shows obvious gradient characteristics, and the degree of breakthrough in the field of different speed products varies greatly. At present, domestic enterprises have mastered the core technology in the field of 2.5G and 10G optical chips, of which the localization rate of 2.5G and below optical chips exceeds 90%, and the localization rate of 10G optical chips is about 60%, basically realizing the independent control of medium and low speed products. However, in the field of high-speed optical chips of 25Gbps and above, the localization rate is only 4%, and it is still highly dependent on imports, which has become a key bottleneck restricting the high-end development of our country's optical communication industry.

4. Market competition: catch-up and breakthrough of local enterprises

Participants in the domestic optical chip market mainly include two types of enterprises: one is professional optical chip manufacturers, such as Yuanjie Technology, Wuhan Minxin, Zhongke Optical Core, Leiguang Technology, Guang'anlun, Yunling Optoelectronics, etc., which focus on the research and development and production of optical chips and have technical advantages in specific segments; the other is comprehensive optical chip module manufacturers or enterprises with independent optical chip business sectors, such as Guangxun Technology, Hisense Broadband, Solsi, Sanan Optoelectronics, Shijia Photonics, etc., which have achieved the coordinated development of optical chips and optical modules by virtue of their industrial chain integration advantages. At present, domestic enterprises are actively deploying 25G optical chip products, and Yuanjie Technology, Guangxun Technology, Shijia Photonics, Hisense Broadband and other enterprises have related business promotion, striving to achieve breakthroughs in the field of high-speed optical chips.

5. Distribution of key enterprises: the development characteristics of regional agglomeration

From the perspective of the regional distribution of listed companies related to optical chips in China, it shows obvious agglomeration characteristics. Guangdong Province and Jiangsu Province have the largest number of enterprises, both with 5, which is due to the perfect electronic information industry ecology and strong R&D strength of the two provinces. Hubei Province ranks third with 4 enterprises, relying on industrial clusters such as "Optics Valley" to form an industrial cluster for optical chip R&D and production. This regional agglomeration effect helps technology exchange and resource sharing among enterprises, accelerating the innovation and industrialization process of optical chip technology.

4. Downstream analysis: "expanding the blue ocean" of application scenarios

1. Optical Communications: A core market that continues to grow

With the continuous progress of optical chip and optical device technology and the continuous decline in cost, the optical communication industry can better meet the needs of massive data transmission and high-speed computing in the future, showing a continuous growth trend. According to data from the China Business Industry Research Institute, the size of China's optical communication market in 2022 will be about 133.1 billion yuan, a year-on-year increase of 8.56%; in 2023, it will increase to 140.5 billion yuan. Analysts predict that the market size will reach 147.3 billion yuan in 2024, and with the deep coverage of 5G networks and the acceleration of data center construction, the demand for optical chips in the optical communication market will continue to be strong.

2. Consumer electronics: structural adjustment amid fluctuating demand

(1) Mobile phone market: short-term recovery and long-term transformation coexist

In recent years, China's mobile phone market has been close to saturation, consumer demand for replacement has gradually weakened, and shipments have shown a downward trend as a whole. However, since 2024, the market has shown signs of short-term recovery, with data from the Academy of Information and Communications Technology showing that mobile phone shipments in the domestic market in April 2024 were 24.071 million units, a year-on-year increase of 28.8%; From January to April 2024, mobile phone shipments in the domestic market were 91.486 million units, a year-on-year increase of 12.3%. On the one hand, this recovery is due to the launch of new models, and on the other hand, it is related to the technological upgrading of the consumer electronics industry chain, in which the application of optical chips in mobile phone cameras, high-speed data transmission and other modules provides support for the improvement of mobile phone performance.

(2) Tablet market: demand recovery and scenario expansion

After four consecutive quarters of decline in 2023, China's tablet market demand will experience a slight recovery in 2024. According to IDC data, China's tablet market shipments in the first quarter of 2024 were 7.13 million units, a year-on-year increase of 6.6%. This growth is mainly due to the continuous penetration of application scenarios such as remote work and online education, as well as the upgrade of performance and functionality of tablet products. Optical chips play an important role in high-definition displays and high-speed network connections in tablet computers, and with the recovery of market demand, the demand for related optical chips will also increase.

3. Automotive electronics: explosive growth driven by new energy

Driven by the boom in the production and sales of new energy vehicles, the degree of automobile electronics continues to improve, and the automotive electronics industry has ushered in a long-term boom cycle. The application of optical chips in automotive lidar, vehicle communication systems and other fields is becoming increasingly widespread, providing key technical support for the intelligence and networking of automobiles. According to data from the China Business Industry Research Institute, the market size of China's automotive electronics market will reach 978.3 billion yuan in 2022, a year-on-year increase of 12%; in 2023, it will increase to 1,097.3 billion yuan. Analysts predict that the market size will further grow to 1,158.5 billion yuan in 2024, and with the continuous development of intelligent driving technology, the demand for optical chips in the field of automotive electronics will show explosive growth, becoming a new engine driving the development of the optical chip industry.

Overall, China's optical chip industry chain is in a critical stage of development in 2024, where opportunities and challenges coexist. The localization process of upstream materials and equipment continues to advance, but the high-end field still relies on imports; Midstream optical chip companies have achieved breakthroughs in the field of medium and low-speed products, but high-speed products still need to be tackled; The downstream application market demand is strong, providing strong impetus for industrial development. With the continuous advancement of technological innovation and the continuous increase of policy support, China's optical chip industry chain is expected to gradually achieve comprehensive independence and control, providing solid optoelectronic technology support for the development of our country's digital economy.