Industrial Environment Facilitates Opportunities in IC Design Industry

Recently, the Ministry of Industry and Information Technology Software and Integrated Circuit Promotion Center released the 2011 China IC Design Industry Development Report. The report shows that in 2011 China's integrated circuit (IC) design industry's total industry sales are expected to reach 68.681 billion yuan, an increase of 25.08% over 2010, accounting for 13.89% of the global IC design industry.

The "Report" believes that in the competition with international semiconductor giants, China's local integrated circuit design companies are well-adhered to highly diversified domestic markets, providing targeted customized services to enable China's integrated circuit design industry in the global semiconductor market. Under the background of slowing growth, sustained and rapid development has been achieved. In the next 3-5 years, with the country’s policy guidance in the strategic emerging industries and the release of China’s huge market demand, the IC design industry is facing tremendous opportunities for development, and the design level in terms of online bandwidth and scale will be greatly improved. And breakthrough.

The IC design industry played a "locomotion" to lead the development of the integrated circuit industry. In February 2011, the "Circular of the State Council on Printing and Distributing Certain Policies to Further Encourage the Development of the Software Industry and the Integrated Circuit Industry" further clarified the importance of the integrated circuit industry, namely "the software industry and the The integrated circuit industry is a strategic emerging industry of the country and an important foundation for national economy and social informationization." The person in charge of the Software and Integrated Circuit Promotion Center of the Ministry of Industry and Information Technology stated that the issuance and implementation of this policy has created a more favorable industrial environment and more favorable fiscal and taxation support for the development of China's IC design industry.

At the same time, the IC design industry as the most dynamic field in China's integrated circuit industry, domestic enterprises in the competition with the international semiconductor giants to fully play close to the domestic highly dispersed market, provide targeted customized services, and rapid response With its service capabilities and other advantages, China's IC design industry has achieved sustained and rapid development under the backdrop of slowing global semiconductor market growth.

According to the latest statistics from IC Design Branch of China Semiconductor Industry Association, sales of IC design industry in China are expected to reach 68.681 billion yuan in 2011, a year-on-year increase of 25.08%, and the proportion of IC design industry in the world has increased from 11.85% in 2010 to 13.89. %. China’s IC design industry has further consolidated its position in the global industry and ranks third in the world.

According to statistics, as of December 2011, China's certified IC design companies reached 383. According to the statistics of IC Design Branch of China Semiconductor Industry Association, there are 534 IC design companies in China, including the chip design department of microelectronics research institutes and complete machine companies. While the overall strength of China's IC design companies has achieved a leap, the expected sales of the first-ranking design companies have exceeded US$1 billion for the first time, reaching 6.669 billion yuan, and they can enter the top 15 rankings according to the ranking of global design companies in 2010. In 2011, there are about 100 companies whose sales are expected to exceed 100 million yuan, accounting for nearly one-fifth of the total.

On the basis of further analysis of the transformation of China's IC industry structure, the "Report" analysis pointed out that the importance of the IC design industry is increasing day by day. Although IC packaging and testing still ranks first in the overall industry revenue contribution of ICs, it is expected that the output value of IC design industry's contribution to China's IC industry as a whole will surpass IC manufacturing for the first time in 2011 and increase year by year, even in the future. In development, it plays the role of a locomotive that drives the entire industry upward.

"Report" analysis pointed out that from the perspective of regional structure, the global semiconductor market experienced the international financial crisis that began in 2008, 2010's rapid development and the slow growth in 2011, the semiconductor industry's focus continues to shift to the Asia Pacific region. In the four major regional markets in the world, the proportion of the Asia-Pacific market continues to rise, Japan and Europe have decreased significantly, and the United States market has remained basically flat for the past three years.

Under the influence of factors such as the shift of electronic manufacturing industry and cost differences, the global semiconductor industry has shifted to the Asia Pacific region. As China has the advantage of low labor costs, international semiconductor companies are shifting to China's industrial chain with relatively low technological content and labor-intensive industries. China's semiconductor industry has gradually become a part of the international industrial chain. Its output and output value have rapidly increased, but its technical content and added value have been low.

As a result of industrial chain adjustment and transfer, the low-tech, labor-intensive, and low-value-added links in the semiconductor industry in China have been given priority. Package testing is one step ahead in China, with the fastest development and the largest scale. It is a relatively full transition of the global semiconductor industry to China; IC design at the upstream has become the weakest link; chip manufacturing is between the first two, and currently the transnational The company has begun to gradually transfer its chip manufacturing to China, and domestic companies have also developed faster. This kind of industrial structure is characterized by low profit levels and weak pricing power. The customer structure has a great impact on the performance of the company. The reason is that the domestic technology level is relatively low, and high-end core chips, key equipment, materials, and IP cores are basically dependent on imports. The relevant standards and patents are subject to human control.

As the "world factory" of global electronic information product manufacturing, China has already become the world's largest semiconductor market. In terms of PCs, the four leading brands such as HP, Lenovo, Dell, and Acer not only used their ODM partners to take China as the main production base, but also ranked the top four companies in terms of total DRAM and CPU purchases for key semiconductor components. As a result, the memory and CPU have become the two largest projects in China's IC import volume. Over the years, the pattern of import-oriented ICs in our country has not changed.

In the past five years, the self-sufficiency rate of China's IC industry in the domestic market has not only not risen significantly, but has also declined. Changes in China's IC self-sufficiency rate have slipped from 21.2% in 2006 to 18.7% in 2011. However, it is worth noting that in the three industries of the IC industry (design, manufacturing, packaging and testing), only the self-sufficiency rate of the IC design industry has steadily increased since 2008, reflecting that China's IC design has gradually been recognized by local machine companies. .

"If the Chinese semiconductor industry missed the PC era dominated by the Wintel Alliance, the era of mobile Internet for smart phones and tablet PCs will provide the Chinese semiconductor industry with an opportunity to catch up." Industry experts said that the mobile Internet era is attracting global ICT giants. With the active participation and deployment of Semiconductors, China's domestic IC design companies will certainly not be absent. In recent years, many Chinese IC design companies have cooperated with British ARM to develop LTE baseband chips and application processors.

Coupled with China's dominant advantages in the 3G/4G communication standard, China's IC design companies can quickly demonstrate their skills on mobile Internet devices such as smartphones and tablets. New emerging industries such as mobile Internet, triple play, Internet of things, low-carbon, smart grid, and photovoltaic industry are rapidly emerging. New industries will use a large number of discrete devices such as integrated circuits or semiconductors, which will benefit the IC design industry.