China semi market to top $28B in 2011, IDC reports

The market research company calls the China market is a "must" for semiconductor suppliers to improve global competitiveness.

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 2/6/2008

Driven by computing and consumer electronics demand, the Chinese semiconductor market will surpass $28 billion in 2011, according to Framingham, Mass.-based market research company IDC.

At the same time, IDC said Chinese semiconductor manufacturing technologies continue to lag behind those in the US, Japan, Korea, and Taiwan. As such, to capture a share of China’s growing domestic market, semiconductor suppliers must include China as part of their global strategy to improve their competitiveness worldwide, the company noted.

“China is an attractive market with opportunities and challenges. To be successful, semiconductor vendors must keep in mind the dynamic characteristics of the Chinese market and the strong influence of the local government on business practices and policies. Local support and expertise, appropriate partnerships with leading domestic OEMs, and workforce localization will give semiconductor vendors an advantage in competing for future business,” explained Patrick Liao, research manager for Asia/Pacific semiconductors at IDC, in a statement.

Based on its research, IDC has also found that the top 10 Chinese IDMs focus on the foundry market, although a few have their own products, with the largest capacity distribution of China fabs represented by 8-inch wafer lines, followed by the 6-inch and 12-inch capacity, respectively. IDC said it expects consolidation among the domestic Chinese IC companies.

In the bigger picture, IDC predicted the computing semiconductor segment will account for more than 62% of the total China semiconductor market in 2011, with remarkable growth from the portable PC and server semiconductor markets.

As well, the digital consumer semiconductor segment is expected to maintain healthy growth driven by DTVs, digital set-top boxes, game consoles, and handheld gaming with the 3G launch in China critical to maintaining market momentum in the mobile phone arena, IDC said.