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China IC market braces up for a tough year

Posted: 13 Mar 2014 ?? ?Print Version ?Bookmark and Share

Keywords:China? semiconductor? market?

The semiconductor industry in China faces a tough year as market demand at home and abroad struggles with the country's sluggish economic activity, according to a report published by The Information Network.

The firm's proprietary leading indicators showed a sudden drop that started as far back as February 2013. President Robert Castellano noted that while China's semiconductor production climbed 18 per cent last year, the consumption growth only registered a 15 per cent increase.

"For 2014, production will decrease to less than 10 per cent year-on-year as a result of weakness on the Chinese economy, although it will outshine the global market which we project will grow six per cent," said Castellano.

Proprietary Leading IndicatorsChina

Figure 1: Semiconductor sales in China exhibit a dramatic slowdown.

The semiconductor equipment market is also expected to experience a sales decline, a downtrend that is affected by the following: the Chinese semiconductor production slowdown, a backlash from US restrictions placed on Chinese productsparticularly solar, and the introduction of competitive Chinese equipment products that rival those of US, European, and Japanese equipment vendors.

"We don't see the Chinese Government's announcement of a $5 billion spend to bolster the IC industry to have much of an impact on semiconductor equipment sales," added Castellano.

Semiconductor foundry SMIC has already given a glimpse of things to come. The company's revenues including wafer shipments from Wuhan Xinxin hit $491.8 million in 4Q13, rising 1.2 per cent year-over-year, and falling 7.9 per cent quarter-over-quarter.

In concert with fab building worldwide, fabs that have sprung up in China are mostly involved in LED production. China's IC capacity increased only two per cent in 2013. During the same year, the global market for LEDs slowed dramatically, minimising any expansion on IC capacity for LEDs this year.

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