Archive

Archive for the ‘Chinese semiconductor industry’ Category

Chinese fabless market set to double! And India’s?

June 10, 2011 Comments off

I received a report from IHS iSuppli, which stated that China’s fabless market is likely to double by 2015! Well done, China, and all kudos.

According to the report, there are 3Cs – China, Consumer and Convergence — that China has been focusing on. However, there are three more Cs — Culture, Content and Contribution — that the report urges China to focus on.

The report states: “The companies must accommodate and adjust to the differing cultures of overseas customers. They must learn more about end-content sectors that drive the growth of technology markets. And China’s fabless firms must take advantage of government contributions to the industry, given that Beijing has instituted a range of policies designed to improve the fabless industry in areas including investments, tax rates and capital investments.”

Having taken its own sweet time,  the Chinese fabless industry is coming up well, and fast! However, what is the state of the fabless market in India?

If one goes back to Dec. 2009, Pravin Desale,  VP and MD India operations, LSI Corp., while speaking at Mentor Graphics’ U2U conference, had said that India has only two (2) fabless firms. If this number, or even a number below double digit is considered to be correct, then India surely has a lot of catching up to do!

Now, who are the leaders in the fabless semiconductor business globally? That’s Qualcomm, Broadcom, even AMD (as per 2010 reports), MediaTek and Marvell. Four of these companies are based in the USA, leaving MediaTek as the only Asian (Taiwan) representative.

Do Indian companies have the necessary experience of designing complete chips from scratch? Perhaps, some may have. Can the Indian companies get the silicon manufactured easily (local manufacturing) and later, debugging it? Here comes the first major gray area! Do the Indian companies have easy access to tools? Perhaps, some, most of them, have that access today!

Now, guess what? The last para — I had written about 7 years ago!  😉

iSuppli raises 2010 foundry forecast; interesting lessons to learn for India from China’s story!

July 9, 2010 Comments off

Yesterday, iSuppli raised its revenue forecast in 2010 for pure-play semiconductor foundry revenue, owing to the renewed demand for consumer-oriented electronics products.

Len Jelinek, director and chief analyst for semiconductor manufacturing, iSuppli.

Len Jelinek, director and chief analyst for semiconductor manufacturing, iSuppli.

“During the first three quarters of 2010, foundries were under intense pressure to meet customer demand,” said Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli. “The pressure is leading to increased revenue, as consumer spending has come back with a vengeance following a dramatic downturn in the fourth quarter of 2008 and for all of 2009.”

iSuppli has raised its revenue forecast for all semiconductor foundry activity for 2010 to $29.8 billion, up 42.3 percent from 2009’s $22.1 billion. It had previously predicted revenue would rise 39.5 percent this year.

By 2014, total pure-play foundry revenue will reach $45.9 billion, managing a CAGR of 9.4 percent from $26.8 billion in 2008. Pure-play foundries are contract manufacturers whose business consists of producing semiconductors on behalf of other chip companies.

Thanks to my good friend Jon Cassell, I managed to hook up with Len Jelinek to find out more.

Enhancing foundry forecast
I started by asking Jelinek what were the chief reasons for enhancing the foundry forecast. Jelinek said: “The forecast increase is based on the anticipated strength in demand for products in Q2 and beyond. Additionally, it is also simple math. The foundry market had a good Q2, and last year, Q1 and Q2 were quite challenging. So, by having a good first half of the year, the percentage must increase.”

Also, given that there has been renewed demand for consumer electronics products, what are the specific CE products, besides netbooks, mobile phones, that have been seeing renewed demand, and why?

He added that televisions have shown significant growth. “Also, if you look at all of the consumer products that are growing — they are the new products that require advanced chips. The foundry suppliers are the primary suppliers of advanced technology 45nm and below. These are also the most expensive products that a foundry manufactures. This of course means that the revenue will go up. This trend will continue into the future because, with the exception of Intel, Samsung, IBM and Toshiba, there are no IDMs that have large volume production capacities at 45nm.” Read more…

Nearly 60pc of China chip manufacturing goes unused in Q1: iSuppli

April 21, 2009 Comments off

EL SEGUNDO, USA: Once the world’s fastest-growing chip-manufacturing region, China hit an all-time low in the first quarter of 2009, with nearly 60 percent of the nation’s semiconductor manufacturing capacity unused, according to iSuppli Corp.

Semiconductor manufacturing capacity utilization in China fell to 43 percent in the first quarter, the lowest level since iSuppli began tracking the market in 2000, and a massive drop from a recent high of 92 percent in the second quarter of 2004. This rock-bottom utilization rate comes as a direct result of low demand spurred by the global economic downturn. However, the utilization plunge indicates that China’s long-nurtured goal of establishing a vibrant domestic semiconductor production industry is in serious jeopardy.

“During the last 10 years, the Chinese government has worked to develop a domestic economy that would provide the nation with economic independence,” said Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli. “The establishment of a technologically strong Chinese semiconductor industry was considered an essential element of China’s long-term domestic economic and technological independence. Unfortunately for China, the plan collapsed as global sales dried up before demand generated from internal sources was able to grow to match demand generated from the rest of the world. Once viewed by China’s government as a pillar of growth, semiconductor manufacturing has turned out to be a financial burden.”

China’s investments in capacity and technology in the semiconductor sector have not provided the financial returns that were forecast for investors, Jelinek added. Adding to China’s dilemma is the overestimation of capacity, which was expected to be shuttered in other regions in favor of lower-cost, more efficient Chinese manufacturing.

“With the addition of the current global economic recession, China’s focus has shifted from establishing semiconductor manufacturing independence to restructuring its entire chip industry before it simply collapses.”

China’s utilization is expected to rise moderately through the rest of the year, but will remain very low at 54 percent in the fourth quarter of 2009. Over the longer term, utilization will rebound to 84 and 85 percent in 2012 and 2013. However, when utilization recovers to these levels, China’s semiconductor industry will look very different from how it has in the past, with the number of competitors in the industry likely to be dramatically reduced due to consolidation.

The figure presents iSuppli’s quarterly and annual estimate and forecast of semiconductor utilization in China.
Looking ahead
What will China’s semiconductor industry look like when utilization recovers?

“Since Chinese semiconductor manufacturers do not possess a technological differentiation from their competitors, they are at a disadvantage, since there is simply far too much of the same kind of capacity in the world chasing after the same opportunities,” Jelinek said.

“This will lead to mergers and consolidations. However, even if suppliers with similar technologies merge, will they create anything but larger companies with bigger cash-flow problems?”

At first glance, such a scenario is most likely what will happen. Nonetheless, there will be one ancillary effect that will significantly impact the landscape of companies in China: The bigger company will be viewed as the most likely survivor.

This perception will transform into reality as customers assure themselves of a strong supply source by aligning with the largest, most cost-effective semiconductor maker. In the end, the smaller company simply will be forced out because it is uncompetitive in technology and price.

No recovery until 2012
With iSuppli not forecasting a recovery for Chinese manufacturers until 2012, it is unlikely that weak companies can survive two years in the face of a negative cash flow.

iSuppli anticipates the first merger in China’s semiconductor industry will be finalized in the second quarter of 2009. This will signal that time is of the essence if a company or a group of companies is going to be able to weather the storm. iSuppli anticipates that by the second half of 2010, a smaller—yet stronger—semiconductor industry will emerge in China.

%d bloggers like this: