BEIJING, June 24 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong: 8235.HK), recently released its article on China's IC industry.
I. Review of China's IC Industry in 2007
Looking back 2007, facing the slow growth of the global semiconductor market and China's IT industry's slowing down, China's IC industry has been keeping its steady growth. The sales revenue reached 125.13 billion Yuan in 2007, up 24.3% over 2006.
Figure 1. The Sales Revenue & Growth of China's IC Industry, 2003-2007
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Source: CCID Consulting, Jan. 2008
As for the development of China's IC industry, IC design, chip manufacturing and the packaging & testing industry have grown, and the packaging & testing industry had the rapidest growth. The sales revenue of China's IC package & testing industry reached 62.77 billion Yuan in 2007, up 26.4% over 2006. As for chip manufacturing, the new projects such as Hynix-ST Semiconductor drive the rapid development of the overall sales revenue of China's chip manufacturing. The sales revenue of China's chip manufacturing enterprises in 2007 reached 39.79 billion Yuan, up 23% over 2006. IC design industry in 2007 has not kept the rapid growth trend of previous years. The growth rate of its sales revenue falls back to 21.2% in 2007 from 49.8% in 2006. It is the first time its growth rate is lower than the growth rate of the IC industry.
Figure 2. The Sales Revenue & Growth of Industrial Chains in China's IC Industry in 2007
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Source: CCID Consulting, Jan. 2008
In 2007, because of the rapid development of the package & testing industry and the slow growth of the IC design industry, the structure of China's IC industrial chain has changed. The market share of IC design fell back to 18% from 18.5% in 2006. The market share of chip manufacturing fell back to 31.8% from 32.1% in 2006. The market share of the package & testing industry increased to 50.2% from 49.3% in 2006.
Figure 3. The Structure of Industrial Chain in China's IC Industry in 2007
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Source: CCID Consulting, Jan. 2008
Looking back 2007, China's IC industry has the following characteristics:
1. Industrial development slows down, some key vendors' performances are unfavorable
The growth rate of China's IC industry slowed down in 2007, especially for the IC design industry, whose growth rate is lower than the growth rate of the whole industry. Meanwhile, the operating performances of some IC design enterprises such as Actions Semiconductor and Vimicro, some chip manufacturing enterprises such as SMIC and Huahong NEC, some package & testing enterprises such as STS had a downslide in 2007.
Affected by the global semiconductor market's downturn, China's market's slow development and high RMB exchange rate, China's IC industry developed slowly in 2007. The major sales revenue of China's IC industry comes from export; the RMB's continuous appreciation directly drives China's IC industrial sales revenue by 5%.
2．Product Line Construction Gets New Results, Investment Becomes the Major Impetus to Drive Industrial Development
As for product line construction and investment, China's IC industry kept strong momentum in 2007.
As for the chip product line, Hynix-ST Semiconductor 12" product line rapidly reached its production target in 2007, and its sales revenue reached 9.359 billion Yuan, up 2.4 times over 2006 so as to drive the enlargement of China's chip manufacturing scale in 2007. Besides, China's many IC chip product lines are constructing or in the process of reaching production target. SMIC's Beijing factory and Tianjin factory, Huahong NEC, TSMC shanghai and Grace Semiconductor plan to extend capacity.
In the package & testing field, major manufacturers are carrying through large-scale expanding production. Jiangsu Changjiang Electronics Technology invested two billion Yuan to construct a new IC factory with five billion sets annual capacity and was official put into use in 2007. Samsung Electronics (Suzhou) Semiconductor's second factory was put into use. Freescale, Qimonda, RFMD and Renesas also increased investment to their package & testing enterprises in China. In addition, new projects also drive the rapid development of package & testing field.
3. Enterprises' Reorganization and Reform Make New Progress, Public Listing Becomes a Development Trend
In 2007, many semiconductor enterprises such as Spreadtrum, Nantong Fujitsu and Tian Shui Hua Tian get listed in NASDAQ and China. China has 19 semiconductor listing companies, which cover IC design, chip manufacturing, packaging & testing, discrete devices and semiconductor materials.
4. Competition is Heating up, IC Design Enterprises Face Severe Challenges
In 2007, second generation ID cards' chip market hasn't increased, which directly affects related enterprises' performance in 2007. Affected by standards, license and carriers' integration, the new markets such as 3G and digital TV have not formally started. Many IC design enterprises which have many years' R&D are still being sustained in China.
Exploring the reasons for the intense price competition in China's IC design field, enterprises' differences are increasingly vague and products' identical trends are the major reason. Currently, most enterprises' products focus on low- and middle-end consuming chips. This also decided that price wars are the most important means of China's IC design enterprises.
II. Forecast on the Development of the Industry and the Market in 2008
In 2008, China's IC market will hit its peak. The growth rate will exceed that in 2007. The major reason is digital TV and 3G driving the market development. However, the development speed of China's IC will slow down in the future. Because China's IC market accounts for a larger share of the global IC market, the development speed of the global IC market will also slow down. In general, the compound growth rate of China's IC market will reach 16.3% from 2008 to 2012. China's IC market will reach 1080.63 billion Yuan in 2011.
Figure 4. Forecast on Size & Growth Rate of China's IC Market, 2008-2012
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Source: CCID Consulting, Jan. 2008
As for price, the price will have a downslide trend in the future. Because the capacities of DRAM and NAND Flash are mastered by some major enterprises, these enterprises' strategies and their price adjustment will have strong effect on market prices. These major enterprises will be more rational in the future. DRAM prices will be steady in 2008, but the price drop speed of NAND Flash will be faster than DRAM. In addition, analog components won't have large fluctuations.
As for industrial development, China's demand continuously increases; industrial policy environment's and investment environment's improvements, talent training and introduction drive the development of China's IC industry. However, the future of the global market is not clear; industrial competition is heating up; industrial chain connection is not smooth, which hinders industrial development.
Integrating these factors, China's IC industry will keep steady growth in the future. It is forecasted that the compound growth rate of the sales revenue of China's IC industry will reach 23.4% from 2008-2012. The sales revenue of China's IC industry will reach 357.66 billion Yuan in 2012. Then China will become one of the most important global IC manufacturing bases.
Figure 5. Forecast on Size & Growth Rate of China's IC Industry, 2008-2012
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Source: CCID Consulting, Jan. 2008
About CCID Consulting
CCID Consulting Co., Ltd. (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: 8235.HK), is directly affiliated with China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu, with over 300 professional consultants after many years of development. The company's business scope has covered over 200 large and medium-sized cities in China.
Based on major areas of competitiveness: industrial resources, information technology and data channels, CCID Consulting provides customers with public policy establishment, industry competitiveness upgrading, development strategy and planning, marketing strategy and research, HR management, IT programming and management. CCID Consulting's customers range from industrial users in electronics, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to becoming the No. 1 advisor for enterprise management, the No. 1 consultancy for government decisions and the No. 1 brand for informatization consulting.
