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Local IC design companies: How to survive

Posted: 06 Jan 2003 ?? ?Print Version ?Bookmark and Share

Keywords:ic design? asic? ic? ic manufacturer? system integrator?

Zhang Hui

VP, Vimicro Corp.

Today, China's local IC design companies still lack worldwide leading core technologies, and hence are unable to compete with highly developed foreign IC providers. A reasonable view could be that the only chance for China's local IC design firms lies in cost advantage, designing some ASICs as substitution for imported ICs used in certain scope of complete sets that are fully matured and less variable in technology and with large production scale.

As for those fields where standard technologies are variable, local IC design companies can only keep its pace with the change. Since standards are usually proposed and formulated by foreign IC manufacturers or system integrators, local designers have little chance to win the game. In these fields, China's local IC providers can never get the cost and time-to-market advantage and can never grow quickly and defeat foreign rivals, unless Chinese system manufacturers can propose and formulate standards (like Datang Telecom's TD-SCDMA technology). This is a critical barrier that China's IC design companies must get over, ahead of which, is a smooth road.

In addition, local IC designers should not play games with foreign IC providers in a universal IC field, since these rivals already have a solid technology background, mass production methodology, and lower cost advantages. To begin with, you should try your games with them only in an ASIC field and must firmly set your footing in the domestic market arena. Chips with international standards, such as 802.11a/b, are also in foreign IC providers' production catalog; you have no competitive advantages with them since they are able to use the most advanced technologies (e.g., 0.13?m, 8-inch) to reduce cost. And even in labor cost, where you are the one dominating; you pay your engineers less than your rivals. But that "less" is not essential as it is the design efficiency that matters. If your designing efficiency is low, your labor cost may double.

China's local IC design companies should focus on only those market sectors that will bloom within one or two years since you have not enough resource and cannot afford to bear the risks. Currently, there are four aspects that are unfavorable for the development of Chinese IC design companies:

? Funds - Currently, the global financial situation is bad, making it very difficult for enterprises to finance and attract risk funds.

? HR - IC design talents are severely short in China, and the cost is very high (if counted with efficiency).

? Technology - Today, China has no real core technologies that are at par with the leading ones. What local IC design companies should do is analyze these technologies and move ahead with the current trends.

? Market - Various China-based companies fail to give enough support to local IC design counterparts. If they would invest in local enterprises and cooperate with them to figure out some innovative "killer" products, our prospects would be bright.





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