Driven by strong 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.
Operations by fabless semiconductor companies in 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, up 11.3 % from 2010.
“China’s fabless industry in 2010 benefited from the booming demand for semiconductors used in cell phones, as shipments last year of mobile handsets designed in China surged by nearly 60 %,” said Vincent Gu, senior analyst for China research at IHS.
Capitalizing on such growth in 2010, leading 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.
Three C’s key to fabless growth in China
“To generate growth in the coming years, China’s fabless semiconductor companies are likely to focus on what IHS iSuppli calls the three C’s: China, Consumer and Convergence,” Gu said.
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.
Moreover, China’s fabless semiconductor suppliers must focus on consumer electronics because the major characteristics of the consumer electronics market including technology, price and quality. On a third front, Chinese fabless suppliers now must engage in the convergence of features in their products, a trend driven by the growing popularity of smart phones and tablets. They also must pay attention to the changes to industries and business models produced by the convergence of features in products.
Three more C’s for continued success
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. 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, given that Beijing has instituted a range of policies designed to improve the fabless industry in areas including investments, tax rates and capital investments.
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.
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2008-2009 Annual Report on China’s Software Market
Currently, affected by international financial crisis, the growth rate of China’s economy slows down, which brings macroscopic unfavorable influence on enterprises’ investment in information technology. Because Chinese government has consider the convergence of informatization and industrialization as important tasks so as to promote innovative national construction; Chinese government encourages enterprise to carry through IT transformation through income tax return and arranging special funds, which is good opportunity for IT industry. Besides, country informatization strategy is the key to drive the demands in IT industry market.
Chinese government will implement ten measures and 4 trillion to stimulate economy; China will strengthen investment in transportation, medical, culture, education and ecological environment, which will bring opportunity for informatization investment. Software enterprises should timely adjust market strategies so as to seize market opportunity. In order to have sustainable development, software enterprises should formulate long-term development strategy and enterprises’ resource optimization, which includes cash flow’s guarantee, the optimization and adjustment of employee and management; on the basis of maintaining existing advantage, they should actively transfer to new emerging market so as to seek new market and growth points.
In the face of innovation and changes in the market, we release 2008-2009 Annual Report on China’s Software Market (General Report), which helps vendors, investors and industry insiders grasp more accurately laws governing the market’s development and in combing the development track of application value:
Deep and accurate market research data: On the basis of in-depth research of leading vendors’ product, service, channel and marketing strategies in 2008, the report depicts changes in the market from the angle of product structure, regional structure, vertical and parallel segments, and distribution channels.
All-round and profound brand analysis: After summing up enterprises’ performance in the dimension of market segments, competitive strategy and SWOT analysis, it analyzes opportunities and challenges faced by homegrown and foreign vendors in the new round of competition.
Scientific and complete forecasts: Through regression modeling and expert verification in major market segments, it conducts analysis of related industry links, to present valuable trend analysis and quantitative forecast result.
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Investing in China’s Media Market
With the news that Rupert Murdoch’s News Corp. is selling its stakes in Chinese TV stations, the focus of attention for investing in China’s massive media market again concentrates on the joint venture as the only permissible route into the market. With a total readership of 1.4 billion, the stakes are high in China in terms of potential advertising revenues, yet the Chinese government is wary of letting foreign investors gain too much of an upper hand in terms of content. That conflict will always be won by the state, which has long erected barriers to foreign investment in the media industry.
In terms of domestic TV, foreign owned channels have only been permitted in Guangdong Province, and even there, players such as News Corp., Viacom and Time Warner have been restricted to market access – News Corp.’s revenues from China in total averaged about US$50 million per annum, against global revenues of US$32 billion – rather small return for such a major investor. Despite News Corp. wooing Beijing through political savvy (Murdoch infamously took the BBC off the China footprint after complaints from Beijing over content, and even married a Chinese national) such “patriotic” stances didn’t ultimately provide the business with the expected returns. Indeed, News Corp. return from China has been 1 percent of their total revenues, a damaging figure when compared to the senior executive time and effort spent on developing the China market, while their TV ratings in Guangdong only amounted to a 4 percent share.
To read the rest of this article, by Chris Devonshire-Ellis, visit the China news site, China-Briefing.com.