Will China Become The Center Of Semiconductor Universe? Industry Vet Gives His Take

In a new Semiconductor Engineering post, industry veteran Bob Smith discussed the potential for China to become the largest global semiconductor hub.

China was the top global exporter in 2014 and accounts for 80 percent of the global mobile phone business, half of the liquid crystal display (LCD) television market, 60 percent of the notebook and tablet industry and 65 percent of global digital camera sales.

However, Smith pointed out that, while China is the largest global consumer of integrated circuits (ICs), 90 percent of ICs are imported.

A Closer Look At China

“The Chinese government is well aware of these numbers and realizes it needs to build its own domestic IC industry and infrastructure to mitigate its reliance on outside suppliers and grow the economy,” Smith explained. China plans on investing up to $50 billion over the next five years to jump-start a local semiconductor industry, but Smith believes that China faces a lot of potential headwinds.

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“Questions have been raised about whether Chinese startups will be able to flourish when information access is restricted, and reliance on government initiatives and funding often hinders innovation and competitiveness, key drivers of a robust presence in the global semiconductor market,” Smith noted.

Pay Attention To The Global Leaders

If China is able to successfully produce a domestic semiconductor industry in coming years, current global leaders such as Intel Corporation INTC, Taiwan Semiconductor Mfg. Co. Ltd. (ADR) TSM and QUALCOMM, Inc. QCOM could soon be in for intense pricing pressures from new Chinese competition.

Disclosure: The author holds no position in the stocks mentioned.

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Posted In: Analyst ColorEmerging MarketsMarketsAnalyst RatingsTechTrading IdeasBob SmithSemiconductor Engineering
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