While semiconductor manufacturing technology in China continues to lag behind its firms' main rivals, global semiconductor vendors must include China as part of their global strategy for better competitiveness, IDC said yesterday.
Framingham, Massachusetts-based research house IDC estimated in a press release that the output of China's semiconductor market would surpass US$28 billion in 2011 because of rising demand in computing and consumer electronics.
Global chip sales may reach US$280.6 billion this year from US$257.2 billion last year, San Jose, California-based industry association World Semiconductor Trade Statistics Inc said in November on its Web site.
China's semiconductor manufacturing technology lags behind Taiwan, South Korea, Japan and the US, said Patrick Liao (廖光河), a research manager at IDC's Asia/Pacific Semiconductors division, in the study Chinese Semiconductor Technology Assessment, 2007.
"To be successful, semiconductor vendors must keep in mind the dynamic characteristics of the Chinese market and the strong influence of the local government on business practices and policies," Liao said.
"Local support and expertise, appropriate partnerships with leading domestic OEMs, and workforce localization will give semiconductor vendors an advantage in competing for future business," he said.
China's semiconductor manufacturing industry began to attract the world's attention following the establishment of Semiconductor Manufacturing International Corp (SMIC, 中芯) in 2001 by chief executive officer Richard Chang (張汝京) and Chinese investors.
Chang is a former vice president of Texas Instruments Inc and once served as chief executive of Taiwan's Worldwide Semiconductor Manufacturing Corp (世大半導體), later acquired by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in 2000. TSMC is the world's largest made-to-order chipmaker.
As the largest chipmaker in China, SMIC in December announced a tie-up with IBM Corp on producing CMOS logic chips using 45 nanometer technology, but it remains a tier-two foundry in this line of foundry business, analysts said.
Citigroup Global Markets analyst Andrew Lu (陸行之) said in a client note on Jan. 30 following a SMIC conference call that he did not expect SMIC to ramp up 45nm technology until the second half of next year.
On Dec. 31, Rick Hsu (
In comparison, TSMC is migrating to 65nm technology aggressively while United Microelectronics Corp's (UMC, 聯電) 45/65nm technology is ramping up faster than expected, Lu said, adding that SMIC's 90/65nm technology was not so impressive.
The IDC study also found that the largest capacity distribution of China fabs was represented by 8-inch wafer lines, followed by the 6-inch and 12-inch capacities respectively. It also noted that industry consolidation may emerge among Chinese IC companies.
Other key findings in the study were that portable PC and server semiconductors will boost the computing semiconductor segment so that it will account for more than 62 percent of the total semiconductor market in China by 2011, while demand for digital TVs, digital set-top boxes, game consoles and handheld gaming devices will maintain healthy growth in the digital consumer semiconductor segment.
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