China’s Impact on the Semiconductor Industry, High Tech, Page 19
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| Page content: Throughout the seven years of this semiconductor business cycle, China's consumption growth has continuously outpaced the rest of the world. Since 2001, the bottom of the last semiconductor business cycle, China's semiconductor consumption has grown at a 29.5% CAGR compared to total worldwide consumption growth of only 8.6%. Two factors drive this growth differential: 1. Growth in electronic equipment production. The rest of the world is transferring its electronic equipment production to China. During 2008 China's electronic equipment production value grew by 5.6% while worldwide production decreased by 0.3% and, as a result, China's share of worldwide electronic equipment production increased from 27.1% in 2007 to 28.7% in 2008. 2. Growth in semiconductor content. Another driver is that electronic equipment produced in China tends to have an above-average semiconductor content. In fact, semiconductor content of the electronic equipment produced in China averaged 25% in 2008. This compares to a worldwide average of 19%, a decrease from 20% in 2007. A slowing growth rate Though still growing fast, the pace of growth of China's semiconductor consumption market has been decelerating for the last four years. Measured in US dollars, growth reached a peak of 41.2% in 2004. Growth then slowed to 30.3%, 26.9% and 23.3% in the following three years and now, for 2008, is registering a still-healthy 16.8%. But measured in local Chinese currency (RMB), the decline in growth is more severe, decreasing from a peak of 41.2% in 2004 through 28.6%, 23.5% and 18.3% in the following three years to only 6.7% in 2008. In fact, as the Chinese record events, 2008 is the first year their semiconductor consumption market declined to single-digit growth since the early 1990s. The immediate cause of this decline is attributed to the worldwide economic crisis and the decline in the pace of the transfer of electronic equipment production to China. For the longer term, the realization is that China's semiconductor market is maturing. The nation has moved beyond its high- speed development period. As such, future growth for China will likely be closer to the worldwide growth rate. PricewaterhouseCoopers 19 | ||||||
