Regional
China’s Fabless Market Set to Double
Driven by strong
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domestic demand and soaring exports, China’s fabless semiconductor market is on a high-growth trajectory, with revenue set to double from 2010 to 2015, new IHS iSuppli research indicates.
China will generate $10.7 billion in revenue in 2015, up from $5.2 billion in 2010. The growth comes on top of a 23.6% expansion in 2010, with revenue rising from $4.2 billion in 2009. Revenue will reach $5.74 billion in 2011. “China’s fabless industry in 2010 benefited
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from the booming demand for semiconductors used in cell phones, as shipments last year of mobile handsets designed in China surged by nearly 60 percent,” said Vincent Gu, senior analyst for China research at IHS. Chinese fabless supplier Spreadtrum Communications designed a range of semiconductors for cell phones including core chipsets, radio frequency transceivers and total wireless solutions for mobile handsets. The company posted $346 million in revenue in 2010, making it the first fabless semiconductor supplier in the country to surpass the $300 million mark. Spreadtrum is likely to retain leadership in 2011 with revenue of more than $500 million.
Fabless firms must emphasize the domestic Chinese technology industry, allowing local tech companies to cash in on the expansion of the burgeoning market. Fabless firms also need to leverage China’s home advantages, such as the vast demand within the country.
perations by fabless semiconductor companies in
Moreover, China’s fabless semiconductor suppliers must focus on consumer electronics because the major characteristics of the consumer electronics market play to the strengths of Chinese chip designers. On a third front, Chinese fabless suppliers now must engage in the convergence of features in their products. They also must pay attention to the changes to business models wrought by the convergence of features in products. However, to take the next step and surpass their worldwide competitors, China’s fabless firms also may want to pay attention to three more C’s: Culture, Content and Contribution, Gu observed.
The companies must accommodate and adjust to the differing cultures of overseas customers. They must learn more about end- content sectors that drive the growth of technology markets. And China’s fabless firms must take advantage of government contributions to the industry. Despite strong growth prospects for the fabless business, the industry faces several obstacles. For one, penetrating the market for logic semiconductors is difficult. Another challenge is obtaining sufficient semiconductor manufacturing fab capacity, which has been a problem for the companies in the past. The fabless firms also must contend with the semiconductor industry’s oligopolistic structure, with market share dominated by a small group of large competitors. The very small size of the fabless Chinese fabless companies makes it harder for them to compete with the worldwide giants.
A bright spot for the fabless industry
remains the support it enjoys from the government, which launched a new policy this year on software and integrated circuit industry. The new policy is more flexible, and the Chinese fabless industry appears set on a fast track to growth in the future.
© 2011 Angel Business Communications. Permission required.
www.euroasiasemiconductor.com Issue III 2011
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