China design business heats up

iSuppli late Friday reported that China TV chipmakers will play a similar electronics supply chain role to that of China mobile phone chipmakers as the electronics design business there heats up.

The firm noted the emergence of domestic companies that are taking advantage of the high demand for digital televisions (DTV), set-top boxes and mobile phones. According to iSuppli, of the 70 million color television shipments in China in 2006, 20 million were produced by ODMs and electronic manufacturing services (EMS) providers. With several dozen DTV design houses emerging in China, they are beginning to provide both semi-knock down and complete knock-down services domestically in cooperation with semiconductor suppliers.

Their role in the TV supply chain, iSuppli said, will become as important as the role of China design houses in the mobile phone industry. With China’s growing global muscle, odds are that will be a strong force in the TV supply chain in no time, giving companies based there an even bigger slice of the pie than they have now and posing a competitive threat to design houses in the United States, Europe and other parts of Asia Pacific.

Of note is that, besides being one of the world leaders in handset manufacturing, China is also now trying to become a major force in handset design. Local design of handsets reached 129 million units in 2006, with that number expected to grow to 170 million in 2007 due to increasing shipments from Chinese handset OEMs, independent design houses (IDH) and ODMs, iSuppli said, adding that Chinese domestic handset OEMs will continue to strengthen their in-house design capabilities in order to decrease the risk of over-reliance on IDHs. Improving design capability will help domestic OEMs to reinforce their competitive positions, the firm said.
 
iSuppli will go into further details on the China electronics supply chain in a Webinar on May 11 at 8:30 a.m. Pacific. For more information, see iSuppli’s “China Spring Market Briefing: DTVs, STBs & Handset Design Dynamics” page.