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China’s Impact on the Semiconductor Industry, High Tech, Page 29

China’s Impact on the Semiconductor Industry

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Chinese semiconductor companies
Table 3 on the following page lists the Chinese semiconductor companies that
had the largest revenues in 2008. By definition, the companies on the list are
the largest indigenous Chinese companies that design, manufacture (or have
manufactured, the legal term for outsourcing), market and sell semiconductor
devices. Therefore neither foundries nor packaging and testing companies are
included on the list. Instead, they, along with foreign semiconductor companies
manufacturing in China, are included in Table 5 (on pages 40 and 41).

The threshold for inclusion in this 2008 listing remained at US$30 million,
the same as used for the 2007 listing. Meanwhile, the number of qualifying
companies increased from 29 to 33. Three companies from the 2007 list--one
IC design and two discrete companies--failed to qualify for the 2008 list due to
revenue declines ranging from 17­44%. Seven new Chinese companies were
added to this year's list--four IC design, two discrete and one IDM (integrated
device manufacturer) companies.

The most notable addition was RDA Microelectronics, Inc. This is an IC design
(fabless) company founded in 2004 with funding from a world premier private
equity fund. RDA is focusing on the development and marketing of RF ICs
(radio frequency integrated circuits). With several CMOS-based transceiver and
GaAs-based power amplifiers successfully launched since 2005, RDA has now
shipped millions of units. Its revenue grew by more than 200% in 2008 and
RDA is now the leader in sales among all China-based RF IC producers.

The largest of the Chinese semiconductor companies, HiSilicon Technology
Co. Ltd., had the second highest growth rate, almost 140% in RMB (or 160%
in US$) and the largest absolute increase in revenues. HiSilicon is the former
chip R&D center of the Huawei Company, but was spun out in 2005. HiSilicon
has considerable experience in telecom ASIC device R&D. Its technical level
ranks among the top tier of China's IC design companies with capabilities of
designing at the 0.11µm technology node. With double-digit revenue growth in
2006 and 2007 and triple-digit growth in 2008, the company is demonstrating
strong competitiveness.

Ningbo KangQuiang Electronics Co., Ltd., a discrete device manufacturer,
also experienced triple-digit revenue growth in 2008--at least 100%. Of the
remaining 30 on the list, nine had double-digit, five had single-digit and one
had zero revenue growth. Finally, fifteen of these companies had negative
revenue growth in 2008.




PricewaterhouseCoopers 29