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Balance needed for IC industry chain growth

Posted: 10 Sep 2003 ?? ?Print Version ?Bookmark and Share

Keywords:arca technology? computer? pc? ic design?

The most promising system products in the China market for the next few years will be PCs and certain non-PC products that are apparently growing faster than PCs, including network computers, information terminals, 3G handsets, networking equipments, communication equipments, and consumer electronics. In addition, the market for cash registers also have huge growth potential as the Chinese government recently has required that each business be equipped with two fiscal cash registers for separate invoices for national taxes and local taxes.

Currently, the bottleneck for the growth of Chinese IC design companies is not the manufacturing capacity of foundries, but the lack of demand. Although several advanced IC foundries, along with related packaging and testing facilities have been established in China, it seems now that this industry chain lacks enough upstream IC design companies as very few of them are of enough scale, and we haven't seen a big market for their design products. As a result, this industry chain now seems to have a lot of investments in building foundries but in the front end of the chain, there are really no big IC design companies, thus the growth of both ends of the chain is unbalanced.

For now, foundries in China rely mainly on overseas orders. At this time it's not yet possible to drive the foundry industry with China's IC design industry. We'll have to wait for some time before that happens.

I also believe that the difficulty of domestic ICs to gain recognition from major Chinese system manufacturers is beyond the system manufacturers' control. It is to a large extent because uncertain reliability of domestic ICs. For instance, ARCA1 CPU didn't get immediate recognition by well-known domestic IT companies right after its release, but a year later, renowned IT companies such as Legend, Digital China, Tai Feng, BOE Technology rolled out network computers that use ARCA1 and ARCA2 CPUs.

Chinese IC design companies must first be able to provide cutting-edge IC products and turnkey application solutions before major domestic system manufacturers consider adopting their IC products in place of similar products from overseas. If you take a look at the IC design industry in China, only very few of the several hundred IC design companies are capable of achieving this, which is why it has been hard for local companies to grow.

- Delei Li


ARCA Technology Corp.

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