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Looking ahead: China's 5-year plan for semicon industry

Posted: 24 Oct 2014 ?? ?Print Version ?Bookmark and Share

Keywords:China? semiconductor? connectivity?

China is setting high goals for the next five years. Next year will be the Year of the Monkey, as well as the first year of the country's 13th five-year plan that will in 2021. The air is already abuzz with what those long-term goals will be and, perhaps more importantly, how the Chinese plan to finish off the previous plan spanning from 2011 (the Year of the Rabbit) to 2015 (the Year of the Goat).

The answer to that last question is with a final big push, according to International Data Corporation. The Chinese government has designated five technology goals as top priorities to finish off the Year of the Goat and get the Year of the Monkey off to an intelligent start. And China has dedicated the funding and the economic pressure to accomplish those goals, according to IDC.

"The Chinese government is doing a number of things to promote e-commerce in China," Kitty Fok, managing director of IDC China, said in a company video posted on YouTube. "The first thing they have done is create a programme called Broadband China the goal of which is to increase broadband access to everyone in the countrywith a goal of covering 95 per cent of cities whereas today its only 45 per cent."

However, according to Fok, the purpose is not just to increase the volume of locally manufactured smartphonesthe goal there is 1 billion by 2017. At the same time, the government wants to improve the quality of the connectivity: "Optimisation is very important in China." With high-quality connectivity, a whole new growth area of Internet services could bloomonce citizens trust that their online purchases will not expose them to the rampant scourge of hackers in China.

China's five-year plan

The 13th Five-Year Plan, starting in the Year of the Monkey (2016), will emphasise connectivity. The company aims to control more than 10% of the worldwide market by 2018. (Source: IDC)

"The second thing," according to Fok, "is to promote local semiconductor industry with the goal of building local brand CPUs and applications processors."

Some successful local brands, such as Spreadtrum Communications Inc. and Fuzhou Rockchip Electronics Co. Ltd., already have their own branded CPUs, but they dominate only the lower end of the market. The Chinese government wants that domination to spread to high-end smartphones, and it is providing the economic and political pressure to accomplish that, according to Fok.

"The Chinese government is already investigating the royalty programmes at Qualcomm," she said, assumably prompting Qualcomm to partner with China's SMIC (Semiconductor Manufacturing International Corporation). "Intel has partnered with Rockchip. This is the first time ever that Intel has partnered with a Chinese semiconductor company. Intel will supply their APU [and] express modem to Rockchip. Then Rockchip can design their own silicon."

In addition to entering a strategic agreement with Rockchip, Intel has invested $1.5 billion to acquire a 20 per cent share of Tsinghua UniGroup, which controls Spreadtrum and RDA Microelectronics. (In related news: Small feature size seen to drive foundry sales)

Many visionaries have called this move by Intel brilliant, since it gets the company into the market on the ground level. It also could use up the excess 14nm manufacturing capabilities that Intel needs to recoup its multi-billion-dollar investment in advanced fabs. Doomsayers call it the beginning of the end for Intel as Chinese manufacturers steal its intellectual property (IP) with impunity from the Chinese government.

Kitty Fok sharing her views of the Chinese government's strategy to advance the semiconductor industry in China with nationwide broadband and smartphones using local branded components.

- R. Colin Johnson
??EE Times

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