China’s Impact on the Semiconductor Industry, High Tech, Page 10
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| Page content: The post-downturn recovery of China's semiconductor More than anything else, the post-downturn growth of industry will be diverse, varying by sector as each reacts China's IC manufacturing sector will be determined by differently to market and economic forces. During the the availability and relative cost of investment capital. next five years, China's IC design (fabless) sector will be Almost all of the sector revenue is produced by foundry strongly driven by China's semiconductor consumption and IDM wafer fabrication facilities. Increasing wafer market and especially China's domestic consumption. fabrication capacity is very capital intensive. The There will be sector consolidation as well as continued Chinese government has provided some very innovative government incentive support for new entrants and investment funding (through separate provincial agencies) successful survivors. Therefore we expect this sector for China's largest foundries, but those foundries have yet to continue to grow faster than the other sectors of to earn an attractive return to support further expansion. China's semiconductor industry and faster than China's consumption market. The multinational IDMs have the appropriate technology and two have made significant investments in China's IC China's OSD sector has a much larger share of both the manufacturing sector. The first had a significant impact on China and the worldwide OSD market and industry than that sector's revenue growth during the past two years; any other sector. Therefore its growth will be driven by the other will start production next year and is expected the growth of both markets as well as by the continuation to have a similar impact during the following two years. of the trend for multinational semiconductor companies to transfer OSD manufacture to Chinese subsidiaries or However, there is a finite and decreasing number of manufacturers on a rebranding basis. Over the next five such IDMs, along with intense competition between years, we expect that China's OSD industry will grow different locations to attract their next wafer fab capacity somewhat faster than the worldwide OSD industry--but investment. Whether another IDM is attracted to invest slightly slower than China's OSD consumption market. in a major wafer fabrication plant in China will be determined by relative success of the first IDMs and the China's IC packaging and testing sector will continue to availability of attractive investment incentives. While that be more affected by the worldwide semiconductor market is a reasonable possibility, it may be several years before than the local market. Most of the sector's capacity is it has an impact on China's IC manufacturing sector. owned and controlled by multinational semiconductor or Therefore we expect that over the next five years China's SATS companies with similar facilities in several regions. If IC manufacturing sector will grow along the lines of our the Chinese government continues to provide competitive moderate scenario, increasing by about 60%. incentives, there is a logical reason to expect China's IC packaging and testing industry to grow faster than China's IC consumption market and to increase by at least 60% over the next five years. 10 China's impact on the semiconductor industry: 2009 | ||||||
