Taiwanese chip companies might benefit in the short term from China’s flourishing semiconductor industry, which is supported by Beijing’s industrial policies and China’s sizable smartphone market, UBS AG said yesterday.
In the summer of last year, China unveiled a plan to raise 120 billion yuan (US$19.33 billion) in seed funds to foster its semiconductor industry over the next five years, which is part of the country’s efforts to reduce its reliance on chip imports and shrink its trade surplus. Chinese semiconductor companies can only supply 15 percent of the chips consumed in China.
“The rise of the Chinese semiconductor industry might be a short-term boon for Taiwanese semiconductor companies,” UBS semiconductor industry analyst Eric Chen (陳慧明) said, adding that the trend would not end until their Chinese rivals became too strong to compete with.
Taiwanese chip manufacturers and designers can grow along with their Chinese customers, which have a massive home market to support their growth, Chen said.
In China, the smartphone market is expected to grow to about 130 million units this year, Chen said.
China’s information technology market is expected to increase 5.7 percent annually to US$211.8 billion this year, IDC forecast.
MediaTek Inc (聯發科), the nation’s biggest handset chip designer, generates a sizeable portion of its revenue from supplying mobile phone chips to more than 100 Chinese mobile phone brands, including Xiaomi Corp (小米), Lenovo Group Ltd (聯想) and Meizu Technology Co (魅族).
To boost chip supply in China, the Chinese government is expected to provide a number of incentives, such as tax breaks, to attract overseas chipmakers without breaking WTO rules, Chen said.
In order to access China’s massive smartphone market, many local companies have started to evaluate the possibility of allocating the manufacturing of cost-sensitive components such as driver ICs and sensors to China, while leaving high-priced baseband chip production in Taiwan, Chen said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s top contract chipmaker, said on Thursday that it was considering building capacity in China to make 28-nanometer (nm) chips.
This year, TSMC plans to expand the capacity of its 8-inch factory to 1.3 million wafers.
TSMC chairman Morris Chang (張忠謀) said in October last year that the rise of China’s chip designers would benefit TSMC, as those companies were all customers of TSMC. TSMC’s Chinese business has been growing rapidly over the past 10 years, making the Chinese market almost as big as its European business, Chang said.
TSMC’s local rival, United Microelectronics Corp (聯電), has obtained approval from the Ministry of Economic Affairs to invest US$1.35 billion in China to make 40nm chips in the next three years.
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