Driven by computing and consumer electronics demand, IDC predicts that the Chinese semiconductor market will surpass $28 billion in 2011. Yet Chinese semiconductor manufacturing technologies continue to lag behind those in the United States, Japan, Korea, and Taiwan. To capture a share of China’s growing domestic market, semiconductor suppliers must include China as part of their global strategy to improve their competitiveness worldwide.

"China is an attractive market with opportunities and challenges," said Patrick Liao, research manager, Asia/Pacific Semiconductors at IDC. "To be successful, semiconductor vendors must keep in mind the dynamic characteristics of the Chinese market and the strong influence of the local government on business practices and policies. Local support and expertise, appropriate partnerships with leading domestic OEMs, and workforce localization will give semiconductor vendors an advantage in competing for future business."

In a study examining the competitive landscape and technologies of the major vendors of Chinese IC design houses (so-called fabless semiconductor companies), integrated device manufacturers (IDMs), and foundries, IDC finds:

• The top 10 Chinese IDMs focus on the foundry market, although a few have their own products;
• The largest capacity distribution of China fabs was represented by 8-inch wafer lines, followed by the 6-inch and 12-inch capacity respectively; and
• Consolidation is expected among the domestic Chinese IC companies.

Domestic semiconductor consumption in China

IDC's analysis of semiconductor consumption in China, based on semiconductor demand for domestic consumption, includes findings such as:

• The computing semiconductor segment will account for over 62% of the total China semiconductor market in 2011, with remarkable growth from the portable PC and server semiconductor markets;
• The digital consumer semiconductor segment will maintain healthy growth driven by DTVs, digital set-top boxes, game consoles, and handheld gaming; and
• The 3G launch in China is critical to maintain market momentum in the mobile phone arena.

About these studies

The IDC study, Chinese Semiconductor Technology Assessment, 2007 (IDC #210019), examines the technologies of the major vendors of Chinese IC design houses (so-called fabless semiconductor companies), integrated device manufacturers (IDMs), and foundries. This study also assesses the Chinese competitive landscape.

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