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Link by link, China crafts its industry

Posted: 09 Dec 2003 ?? ?Print Version ?Bookmark and Share

Keywords:ic design? eda? china?

An ultra-modern IC design center here is slated to become a hub of creativity, one of several sources that will seed China's domestic design firms. Today, the background noise of construction, and the empty fields and offices nearby, serve as a reminder that there is much work to be done.

At the same time, the science park shows how much has already been accomplished. LCD maker AU Optronics, EMS providers Solectron and Celestica, semiconductor foundry He Jian, plus numerous other manufacturers and a handful of IC design houses have already set up shop here.

China's chip leaders are assembling the links of the electronics food chain - IC design, foundry, packaging and test, system design houses, EMS and brand-name distributors. To date, the country's policy-makers have relied on luring foreign investment and management to establish the industry, but the country is beginning to see its strategic focus on semiconductors bear homegrown fruit.

From Shanghai and Shenzhen to Wuxi, Xian and Suzhou, IC design centers are coming online, serving as training centers, manufacturing and management consultants and venture-capital sources. Elsewhere, universities are striking deals with EDA tool vendors so that students can get their hands dirty. And any government official worth his salt looks for ways to bring semiconductors to his town.

The efforts will all speed development of China's IC design industry, though by how much is difficult to discern.

Long road

Observers say China can match Taiwan in technical expertise in 10 years. But it will take a lot more for China to duplicate Taiwan's success in building a supply chain and sniffing out opportunities. And it will be even longer before it challenges America's chip design pre-eminence.

That does not seem to faze many Chinese IC leaders, however. "America will have good products; Taiwan will have similar products, but for [less money]; and China will be even cheaper. But then America will create new products, so there isn't anything to worry about," said Zhao Weijian, executive president of Beijing Tsinghua Tongfang Microelectronics Co., a maker of chips for IC cards.

The more immediate challenges are what preoccupy the nation's chip leaders. For one, the engineers who will lead China's chip ascendancy are only now leaving school to enter the work force. It will be several years before they are at the same technical level as their counterparts in Taiwan.

The IC design center in Suzhou recently welcomed a fresh crop of 50 graduate students, picked from the top 100 or so Chinese universities, and they need training. "They only have a lot of theory," said Chen Lan, vice president of the center. "We can give them experience with the tools they need."

Another worry for China is that many of its small IC design companies are failing because they are not looking beyond the chip design phase. For every IC design house here that notches small successes, there are more than 10 that just scrape by or go out of business.

Design firms are realizing that crafting a chip, or even copying a low-end one, is less than half the battle. Building a reliable supply chain around the chip, verifying its compatibility across myriad systems, and gaining the trust of systems companies - even local systems houses - loom as challenges.

"We can control the design process. If we fall behind, we can hire more engineers. But we have no control over whether someone will use the chip. It is a very long process to win trust," said Shen Hua, a former government researcher who now runs BLX IC Design Corp Ltd., a small but well-connected firm that sells embedded processors.

In the past year, the government has put some effort into making sure that companies are looking beyond the engineering phase. At the Shanghai Research Center for Integrated Circuit Design, for example, technology training is the primary mission, but the center also mixes in market dynamics.

The Shanghai center acts as an incubator for local companies, offering access to design tools, intellectual-property cores, and tapeout and testing services. It's also willing to provide seed capital and management consulting. But access is granted only after the center is satisfied that companies have done their homework, including striking up relationships with potential clients.

"They need to dig out the requirements of local system houses. If they just research high-end technology, it may not be very useful," said Ge Qun, vice director of the center.That is not to say that China has given up on its advanced projects. For one, it is investing in long-term research, such as grid computing, 64-bit processors, Linux-based software systems and supercomputers. Second, it is fostering a host of small companies that could find success in a growing consumer goods market. It will be a rough-and-tumble market, with competition not only from low-cost domestic players but also from more established companies based offshore.

Copycats' critics

Finally, China is developing homegrown versions of established technologies, such as embedded processors, DSPs and optical components. It's this tactic that sparks the most debate: Critics say the government shouldn't be spending limited resources on duplicating products already successful in the marketplace.

But some of the duplicated components are likely to find their way into security and aerospace applications, where China would like to rely on homegrown technology. And even if developed products never see the light of day, they are still useful, said Ye Tianchun, director of the Beijing EDA Center, a part of the prestigious Chinese Academy of Sciences. "Because we are behind the rest of the world, we have to try things that push us. That helps us to advance our skills," he said.

Anecdotal evidence suggests that the Chinese design houses' sophistication and scale are increasing. But "it's too small to call it an industry yet," Ge said, noting that China's IC design industry earned little more than $200 million in 2002 and is projected to take in only $800 million in 2007.

The building blocks exist for making China a design and manufacturing hub in the Asia-Pacific. Industry players here say the sheer size of the population provides a far larger pool of smart engineers from which to choose in China than in Taiwan. The missing link is experience.

Yet, the next generation of Chinese engineers seems ready to learn, and lead.

"We're not just waiting for technology," said Chen, amid the echoes of hammers at the Suzhou training center. "We are building it on our own."

- Mike Clendenin

EE Times

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