In the context of the restructuring of the global supply chain, geopolitical games and the upgrading of technical barriers, the overseas expansion of China's semiconductor components is not only the choice of market expansion, but also the only way for industrial upgrading. China Exportsemi will analyze the differentiated logic of passive components and active components going overseas from the five dimensions of necessity, strategic differences, action paths, future prospects and professional empowerment, and provide strategic reference for Chinese manufacturers.
1. Why go global? - Necessity analysis
1. The structural contradiction between domestic overcapacity and high-end dependence
- Medium- and low-end overcapacity: The domestic semiconductor industry has formed large-scale production capacity in the low-end fields (such as discrete devices and basic photoresists), but the high-end market is still dominated by giants from the United States, Japan and South Korea. For example, the domestic silicon carbide production capacity can meet the demand of more than 10 million electric vehicles, but high-end products still rely on imports, and the structural contradictions are prominent.
- Profit margin squeezing: Frequent price wars in the field of passive components have compressed profit margins to less than 5%, while active components (such as automotive-grade chips) have a domestic substitution rate of less than 30% due to high technical thresholds.
- Policy Forced Transformation: The intensification of the U.S. technology blockade against China and the restriction of imports of high-end equipment and materials have forced enterprises to obtain technical cooperation and market resources through going overseas.
2. The window period for the reconstruction of the global supply chain
- Regionalized production trends: The U.S. is pushing for "reshoring manufacturing", but high costs (e.g., labor wages three times that of Southeast Asia) and supply chain shortcomings (e.g., dependence on imports of chip manufacturing equipment) have caused major international manufacturers to postpone building factories in the U.S., providing opportunities for Chinese companies to fill the gap in emerging markets.
- The rise of Southeast Asia-Mexico hubs: Mexico has become a manufacturing hub for automotive electronic components due to the North American Free Trade Agreement, and Southeast Asia has attracted passive component capacity transfer with low-cost labor, and Chinese companies can avoid tariff risks by localizing their layout.
2. Passive Components vs. Active Components: Strategy Differences and Case Analysis
1. Comparison between technical threshold and market demand
Figure: Comparison of technical thresholds and market demand for passive and active components
2. Case in point: Channel is king vs. technology-driven
- Passive component "channel breakthrough": Fenghua Advanced Technology integrated the European distribution network through the acquisition of Norstel (silicon carbide substrate manufacturer), and supported global delivery with a Southeast Asian production base (40% reduction in labor costs).
- Active Component "Technology Breakthrough": Huawei HiSilicon participated in the formulation of 3GPP standards and entered the European market with 5G baseband chips. After the acquisition of OmniVision, Vail Co., Ltd. broke through the barriers to automotive image sensor certification with its North American R&D center.
3. How to break the game? -- Action guidelines for domestic manufacturers
1. Passive components: cost priority, layout of emerging manufacturing hubs
- Southeast Asia capacity expansion: Vietnam and Malaysia have 15%-20% lower semiconductor packaging and testing costs than China, and can undertake the production of standardized components such as MLCCs and inductors.
- Distribution network integration: Cooperate with international distributors such as Avnet and WPG to quickly penetrate the consumer electronics and industrial fields by using their local warehousing and customer resources.
2. Active components: technology + service two-wheel drive
- Participate in the International Standards Alliance: Join JEDEC (Solid State Technology Association) and AUTOSAR (Automotive Software Architecture Alliance) to enhance the technical discourse. For example, after BYD Semiconductor passed the AEC-Q101 certification, the automotive IGBT module received orders from European car companies.
- Build a localized service team: Set up FAE (Field Application Engineer) teams in North America and Europe to provide customized solutions. TSMC's delay in production due to a lack of skilled workers at its U.S. factories shows that localizing talent is crucial.
4. Future outlook: policy dividends and long-termism
1. Double dividends during the policy window
- Domestic incentives: The 14th Five-Year Plan Semiconductor Special Fund is tilted towards overseas enterprises, and investment in Southeast Asia can receive a tax deduction of up to 30%.
- Opportunity in the international game: The US Inflation Reduction Act restricts Chinese cell module imports, but "neutral capacity" in Mexico and Southeast Asia can be used as a springboard to circumvent trade barriers.
2. The need for long-term commitment
- Balance between cost and patience: The North American market has a 12-24 months technical validation cycle, and customers are not cost-sensitive (willing to pay a 20% premium for reliability), requiring continued investment in R&D and local services.
- Supply chain resilience building: Referring to CATL's model of building factories in Hungary, we will diversify risks through "overseas R&D + regional manufacturing" to avoid dependence on a single market.
5. Professional empowerment: solve the "last mile" problem of going to sea
The globalization journey of Chinese semiconductor manufacturers is essentially a double test of "hard power" and "soft power" - the former is technology R&D and manufacturing capabilities, and the latter is a system engineering of localized operation, compliance management and ecological integration. In the face of complex and changeable challenges in overseas markets, making good use of professional service resources has become a common choice for leading enterprises to reduce costs, increase efficiency and avoid risks.
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Figure: Yeehai Global's eight-step method for overseas marketing
6. Conclusion
China's semiconductor components going overseas have shifted from "scale expansion" to "value upgrading", and global competition has entered a "systematic operation" stage. Passive components need to win with cost and efficiency, while active components need to build barriers with technological breakthroughs and ecological integration. At present, the triple resonance of policy dividends, supply chain restructuring and market demand is the key turning point for Chinese enterprises from "passive order-taking" to "actively defining rules". In essence, the systematic integration of technology, policy, and ecological resources will determine whether going overseas can be successful. For Chinese semiconductor manufacturers, independent capabilities determine the lower limit of going overseas, and the empowerment efficiency of specialized tools will directly determine the upper limit of globalization. Only by adhering to long-termism can we achieve a leap from "breakthrough" to "pilot" in this global competition and cooperation.
