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Will a TI-like firm ever come out of China?

Posted: 10 Sep 2012 ?? ?Print Version ?Bookmark and Share

Keywords:fabless? R&D? foundries?

Local CEOs and executives attending the China Fabless CEO Forum & Awards event, organized by EE Times-China, debated whether or not the country will soon see the rise of a firm that can rival the size and massive success of Texas Instruments. The consensus: not just yet. Junko Yoshida of EE Times explains why:

Make no mistake. China is rapidly transitioning from its role as a manufacturing center to a design center for the electronics industry. The latest annual China Fabless Survey conducted by EE Times-China revealed that volume production of digital ICs at 45nm or below by mainland China local fabless companies has grown by 33.3 percent, compared to that of last year.

The earnest discussion among the panel lacked the usual chest-thumping by the Chinese executives. Instead, there was soul-searching and a list of seven reasons why China is still better at tea than TI.

1. Many Chinese fabless companies are too busy to survive.

Jeff Ju, president and CEO of Dioo Microcircuits Co. (Shanghai), said, "Local guys are under tremendous pressure to survive." Local Chinese fabless with no IPs of their own are starting their own R&D from scratch. They can't, at this point, imagine a way to catch up with a behemoth like TI. Sometimes, because they're consumed by day-to-day operation, "local Chinese fabless aren't even familiar with the technologies and IPs that foundries can offer them," Ju added.

2. They lack multiple product lines.

Few Chinese fabless companies have multiple product lines. Many, too busy chasing what they perceive to be the hottest market of the moment, are one-trick ponies. In contrast, TI has revenue coming from multiple sources ranging from analog to embedded (microcontrollers), wireless and others.

3. They don't know how to get bigger.

Many international companies grow "big to bigger by mergers and acquisitions," but this isn't so for Chinese fabless companies, said Shaojun Wei, professor at Tsinghua University (Beijing). The first-generation CEOs of small local fabless companies are "too emotionally attached" to the companies they founded, and they find it very difficult to merge with other companies, he explained. "That's a big problem here."

4. They're not open-minded.

"Fundamental to mergers is to agree with other companies," said Luo Yi, CEO of X'ian Semipower Electronic Technology Co. (X'ian). Chinese executives, generally speaking, don't communicate with other companies with an open mind about�the possibility of a mutually beneficial deal. "Except for Huawei, I don't see many Chinese fabless companies that can pull that off."


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