Regional v Final DR 18/12/08 10:52 Page 66
66
REGIONAL ROUNDUP
Chinese chip firms shift to
capitalise on domestic growth
A
fter years of double digit annual
growth, China’s semiconductor
sales revenue in 2008 is expected
to rise by only 6.7 percent to reach $81.7 billion,
up from $76.6 billion in 2007, iSuppli Corp.
predicts.
However, China’s fabless integrated circuit (IC)
industry is expected to perform better, expanding
by 12.3 percent to reach $3.5 billion in 2008, up
from $3.1 billion in 2007.
“This growth in fabless IC revenue is being
driven by domestic sales of wireless and consumer
electronics products, rather than by exports,” said
Vincent Gu, China research analyst at iSuppli.
“Moreover, the Summer Olympic events in Beijing
and other Chinese cities this year encouraged the
release of new mobile handsets supporting the 3G,
digital terrestrial multimedia broadcast (DTMB)
and China Mobile Multimedia Broadcasting
(CMMB) standards, boosting sales of associated
ICs.” “iSuppli expects more than 100 Chinese IC
China’s domestic market situation improved in companies to disappear within the next two years,”
2008 despite regulatory restrictions and an Gu warned. “Many companies presently are
incomplete supply chain. Popular applications seeking buyers and a total of four companies
supporting new domestic standards will appear in already have been acquired by foreign
2009 as their industrial ecosystems mature. semiconductor firms during the past 12 months.
Although there is substantial economic uncertainty, China’s fabless IC industry is polarised with about
continued revenue growth is anticipated in 2009. 50 companies achieving success and the remainder
The attached figure presents iSuppli’s forecast struggling to survive. Some companies are losing
for fabless IC industry revenue in China for the money and have no mature products available to
period of 2008 through 2012.Today, more than deliver the revenues needed to continue doing
550 fabless companies compete in China. Most of business. Most companies have announced lay offs,
these firms are young and small. More than 88 cut production lines or have shut down entirely.”
percent will generate less than $10 million in On the other hand, there are expected to be
revenue during 2008 and are struggling to several Chinese fabless firms that will be seeking
continue their growth.There are four major success IPOs on the NASDAQ and domestic stock
All information
factors in China’s IC fabless industry: market, exchanges during 2009. iSuppli expects that at
kindly supplied by
manpower, money and timing. U.S. fabless IC least five companies will seek IPOs and at least 10
iSuppli.
companies have advantages in the areas of companies will be involved in mergers next year.
technology and innovation. This frequently makes
them winners in emerging markets. In contrast,
Taiwanese companies have effective cost controls
and are highly integrated, helping them to succeed
in mature markets.
The launch of an alternative stock market in
Shenzhen, called the Chinese Growth Enterprise
Market (GEM), had been expected to prompt a
flood of fabless IC initial public offerings (IPOs) in
2008. However, the GEM was not introduced this
year because of the current global financial crisis.
Moreover, venture capitalists generally lack
interest in China’s IC industry. A majority of
semiconductor firms are short of capital and face
cash flow problems.
www.euroasiasemiconductor.com December 2008 / January 2009
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