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Gartner: China to occupy 63% Asia chip market by 2011

Posted: 15 Jun 2007     Print Version  Bookmark and Share

Keywords:Asia chip market  China chip market  Gartner research 

Research firm Gartner projected Asia's chip market to continue outperforming the rest of the world over the next four years, expanding more than 8 per cent annually to hit Rs.8,29,593.20 crore ($203 billion) by 2011, according to research firm Gartner.

Gartner is predicting that China, which already accounts for more than half of the regional market outside of Japan, will represent 63 per cent by 2011, stealing share from more established industry hubs like South Korea, Taiwan and Singapore.

India is also quickly emerging as a challenger to other countries in the region, noted Gartner, but the battle to become the epicenter of Asia's electronics industry is China's to lose.

The continuing trend of manufacturers outsourcing production and, increasingly, design to Asian firms will fuel much of the region's expansion in the years ahead, said Philip Koh, VP for semiconductors at Gartner Asia Pacific.

Koh warned heavy price competition would see many of Asia's smaller contract manufacturers disappear or become absorbed by industry giants. Gartner also expects more sales conflicts between electronics firms and their outsourcing partners in the years ahead as the latter seek to develop and market their own brands.

Red chips
Global semiconductor companies should expect to face an incremental increase in competition from China, where more local manufacturers are following companies like Huawei Technologies and ZTE Corp. in opting to fund their own chip design subsidiaries, Koh said.

He believes a drive to improve margins and present "a more global image" would result in around 20 per cent of China's top electronics manufacturers having their own chip design facilities by 2011.

Most players will concentrate on low-end processors for devices such as DVD players and digital STBs and will have a "very small" impact on global vendors in the short term, he said.

But he added that many China IC designers would seek to extend their capabilities to more sophisticated areas in the future, and would "have to be looked out for" in the years ahead.

India on the horizon
Like many others, Koh agrees that India's semiconductor market is in its nascent stages but said it would present "tremendous opportunities for growth" over the next five years, especially for device and chip manufacturers that can tap in to the underserved lower end of the local market with affordable products.

Rising domestic demand for CE as well as a more favourable policy environment that offers tax holidays and infrastructure incentives will help both equipment production and the semiconductor market grow by about 16 per cent annually until 2011, Koh said.

Gartner recommends that global manufacturers making forays into the country focus on design and R&D activities, where India already boasts a significant pool of talent.

He cautioned that the country still faces serious challenges, including patchy infrastructure and transport networks and relatively high electricity and finance costs. "These are areas that are going to slow down growth," he said.

- Jonathan Hopfner
EE Times

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