China’s Fabless Industry to Quadruple by 2008

Online staff -- Electronic News, 11/2/2004

Explosive demand coupled with strong government support is expected to quadruple China’s fabless semiconductor market from $288 million in 2003 to $1.2 billion in 2008 – a compound annual growth rate of 32 percent, iSuppli Corp. believes.

As of mid-year, the El Segundo, Calif.-based firm estimates that there are about 468 IC design companies in China, most of which are engaged in a struggle for survival or are burning through funding from the government or private investors.

While iSuppli believes there is a place for local fabless companies in China, it will likely be many years before the industry grows to a significant size.

Until recently, Chinese OEMs had not used the services of local fabless companies because of quality and availability concerns, but these companies have proven their capabilities after earning some significant design-win contracts from leading Chinese OEMs. With this change more customers have become willing to try Chinese fabless firms, which should help them companies grow quickly.

Chinese fabless companies still have a way to grow with only a dozen generating annual sales topping $12 million, with the top player, Beijing Datang Microelectronics, reporting $60 million in sales for 2003.