The market is vast and IC design needs survival of the fittest

When you hold the iPhone and play Angry Birds with ease, the upper reaches of these electronic products, the IC design industry is facing the pain and baptism of an industrial reform.

IC design is the upstream industry of the IT industry. Although it does not directly relate to consumers, it continues to change our lives through consumer electronics. The CPU is the engine for the replacement of computers. The IC card facilitates our clothing, food and transportation, MediaTek's Mobile phone wafer set off a "cottage machine" trend...

Consumers have promoted the development of public information in the industry. In 2010, the global retail sales of consumer electronics products reached US$873.0 billion, of which China’s consumer electronics retail sales accounted for 13%. China has rapidly developed into the world’s largest consumer electronics product manufacturing base and the second largest Consumer electronics market.

"China is accelerating its transformation from 'the world's factory' to the 'world market'," said Ms. Ren Lifeng, vice president of China Resources Global Development's Domestic Trade Development Department, at the Global Electronics Products and Parts Sourcing Fair, which opened yesterday.

According to a survey conducted by China IC Design Corporation, 57% of ICs designed in China are used in consumer electronics products such as mobile phones and tablet computers. The main characteristics of the consumer electronics field are rapid innovation and fierce competition, and will continue to promote the development of China's domestic IC design industry.

In recent years, the proportion of IC design industry in the integrated circuit industry has been rising. The proportion of China's IC design industry in the domestic IC industry has increased from 5.3% in 2000 to 24.3% in 2009, accounting for the proportion of IC design industry in the world. From 1% to 10.7%.

China Semiconductor Industry Association integrated circuit design branch data show that the domestic integrated circuit design industry sales revenue from 1.2 billion yuan in 2000 to 38 billion yuan in 2009, the average annual compound growth rate of up to 41%. In 2010, China’s IC design industry achieved sales of approximately 55 billion yuan, which is an increase of approximately 45% from 2009.

According to the Global Sources Survey, China's current IC design industry has made great progress. Although 52% of the respondents still use 0.13 micron and below process technologies in digital IC design, 9.2% of the companies surveyed are large-scale. Mass-produced digital ICs use a process technology of 45 nanometers or less. Global Sources analysts believe that in the next few years, there will be more powerful Chinese chip design companies using advanced 40-nanometer and 28-nanometer process technologies.

"Where the market is, where is the design talent and where is the industry?" Mr. Shi Bolian, publisher of Global Sources, said that it is China's growing consumer electronics market that has greatly promoted the development of the IC industry and also attracted attention. More and more IC design companies have gathered.

The tide of mergers will start as of the end of 2010. There are more than 500 IC design companies in China, large and small, and the output value of the IC design industry is approximately twice that of China, but there are only 260 IC design companies.

Despite the large number of IC design companies in China, there is a status that the level of design and design capabilities are not growing rapidly. "China IC design company is not easy to live, earning market size, but not make profits, or even become an assembly company." Dr. Wei Shaojun, director of the Mobile Computing Research Center of Tsinghua University, said.

"There are not many companies with more than 500 companies, depending on what position they are based on. If these companies are all excellent, then it is not too much. The problem is that of these 500 companies, there are a lot of vegetative companies that are not living or can't live. Wei Shaojun said, "These 'vegetative companies' have made the overall quality of the company low, imprisoned some excellent talents, and urgently needed the survival of the fittest."

In addition to these “vegetative companies,” China’s IC design companies are also facing the design of high-end products with rising costs, long lead times for OEMs, and inability to “burn” money due to shortage of funds.

"There are not many companies in the country that can now carry out R&D of 28-nanometer process technology. This sector has invested too much in the early stages," said Zhang Xiaobo, a global resources analyst. "It's like a gamble. If there are more than 500 IC design companies, Half of them are still living below the line of survival, which will inevitably provide M&A and restructuring opportunities for many industry capitals."

Zhang Xiaobo also said at the same time that this also means that overseas funds are penetrating the Chinese IC design industry. According to its disclosure, in recent years, various funds such as industrial capital and venture capital have quietly participated in the "treasure hunt" game of China's IC design industry. Many companies have recently introduced foreign capital.

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