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China eyes global lead in semiconductor industry

Posted: 07 Aug 2014     Print Version  Bookmark and Share

Keywords:semiconductor  China  integrated circuit 

The latest statistics released by IHS Technology on Chinese production of semiconductors revealed the huge effort China has to make to build a globally competitive semiconductor industry—a goal that China aims to achieve by 2030.

To help us understand China's challenges, IHS estimates that, taken together, China, Hong Kong, and Taiwan posted a year-over-year increase in semiconductor production revenue from $24.1 billion in 2012 to $27.5 billion in 2013.

However, the bulk of semiconductor production in Greater China occurred in Taiwan, where chip production was $18.4 billion in 2012 and $20.6 billion in 2013. By contrast, chip production in China/Hong Kong stood at $5.7 billion in 2012 and increased to $6.9 billion in 2013, or 2.2 per cent of the world market, which in 2013 was $318.2 billion. The figures only take into account the value of shipments without any of the added costs under "consumption."

"You might think of this as just a different measurement of value captured earlier in the chain—before the semiconductors even get to the OEMs," says Myson Robles-Bruce, principal analyst with IHS Technology, who covers the Semiconductor Value Chain.

Barriers to China's chip development

To turn this trend around, the Chinese government recently published a document entitled "Outline of the State to Promote the Development of the Integrated Circuit Industry," which provides a blueprint for how China hopes to ramp up its integrated circuit (IC) sector in the years ahead. The document also highlights the challenges that China faces in its efforts to jump-start its semiconductor industry, which Chinese officials believe is critical to the country's high-tech development.

"China's IC industry is still very weak, far from supporting economic and social development as well as national information security, national defence, and security-building needs," the report said.

Declaring that semiconductor production is essential to the foundation of the information technology industry's rapid development, the document described the importance of an IC sector as "the measure of a country's comprehensive national industrial competitiveness and an important symbol."

Compiled by China's Ministry of Industry and Information Technology, as well as the National Development and Reform Commission, the Ministry of Science, and the Ministry of Finance, the document also suggests that China is missing opportunities to produce chips for mobile phones, TV sets, and industrial equipment—to name a few areas where the IC sector could reap billions of dollars for the Chinese economy. No country knows this better than China, which is a large consumer of ICs used in high-tech manufacturing.

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