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Round-up Report
April 2004
China’s semiconductor demand to grow 29% in 2004(Apr 26, 2004)
China Outlook Consulting estimates that China’s semiconductor demand will grow 29% to reach US$58 Bn in 2004. This estimate consists of US$48 Bn for integrated circuits and US$10 Bn for discrete semiconductor devices.
Based on the recent China Market Round-up report released by China Outlook Consulting, China consumed US$36.7bn in ICs in 2003, up 50% driven by a 34% growth rate in the system manufacturing sector. However, 96.5% if ICs were imported and only 3.5% of them were made by China’s local manufacturers.
China will continue to rely on imports to satisfy its semiconductor demand because the growth of the electronics manufacturing sector is much faster than that of the domestic growth for Chinese semiconductor design and manufacturing capacity. For complete details, please refer to China Outlook Consulting’s Round-up report.(This is a live link to the Round-up Description page)
China postpones implementation of WAPI(Apr 26, 2004)
China recently announced the postponement of its June 1 deadline for the implementation of its Wireless Authentication and Privacy Infrastructure (WAPI) standard. The announcement was released after a high level meeting between US trade officials and China’s Vice Premier Wu Yi in Washington.
China’s WAPI is not compatible with the current Wi-Fi security standards. The enforcement of implementing WAPI may reduce the big wireless players’ selling products in China and possibly start a high-tech battle between China and the United states.
Meanwhile, China will cooperate with IEEE to revise its WAPI. This can be regarded as a soften effort from China’s side.
NEPCON Shanghai/EMT China 2004 starts from April 26-29(Apr 26, 2004)
The 14th annual NEPCON Shanghai/Electronics Manufacturing Technology China (EMT China), the largest electronics manufacturing event in China, will be held in Shanghai Everbright Convention & Exhibition Center on April 26-29.
The event incorporates five industry segments: (1) printed circuit board production & packaging, design test and assembly, and surface mount technology; (2)test and measurement equipment; (3) suppliers for contract manufacturing; (4) component manufacturing to complement EMS providers in China; (5)digital factories.
Over 650 top manufacturing companies from 18 countries and regions will be seeking new business contacts and displaying their state-of-the-art electronics production technologies.More than 80% of the industry suppliers are represented in the show, including Agilent Technologies, American Tec, Assembleon, DEK, Electronic Scientific Engineering, FlexLink, Fuji, Gelec, Kasion, Leeport, Mydata, Nutek, Omron, Siemens Dematic, Sun East, Teradyne, Universal Instruments, Yamazen, and many others.
MII: no new licenses for cell phone production in 2004(Apr 19, 2004)
The MII won’t issue any new licenses or new policies for producing mobile phones in 2004, according to a China Daily report.
MII’s current regulations which were issued on Dec. 31, 1998 showed that no new mobile handset manufacturing licenses would be given to foreign firms since then and that 60% of mobile phones produced in China by foreign firms needed to be exported.
At present, China’s mobile phone market is saturated by almost 100 brands, with some of the licensed firms making money by leasing their production licenses. Meanwhile, joint ventures between licensed firms and non-licensed firms have become a common practice in order for a non-licensed firm to become involved in handset production.
AMD plans to open a TMP facility in Suzhou(Apr 19, 2004)
AMD recently announced a plan for a new test, marking and packaging (TMP) facility in Suzhou, China. This is its second TMP facility in Suzhou with a total investment of US$100 million.
The new facility will test, mark and package both seventh generation microprocessors and eighth generation microprocessor products and will serve both China’s local OEMs and international OEMs.
“This second, state-of-the-art TMP facility in Suzhou is another key milestone for AMD’s expansion in China,” said Karen Guo, corporate vice president and general manager of AMD China. “Building this TMP facility in Suzhou allows us to be even closer to our PRC customers, and enhances AMD’s competitiveness in the important Chinese marketplace. Our customers—including local OEMs and others here in China—can have even faster, easier access to AMD microprocessor products right here in the region.”
The new facility is expected to be operational by the fourth quarter of this year.
Lucent fires 4 executives at China operations(Apr 19, 2004)
Lucent recently announced the firing of 4 executives at its China operations because of violations of U.S bribery laws. The four executives are: the president, chief operating office, a marketing executive and a finance manager.
Under the US law that forbids bribe payments, US companies can be fined up to US$2 million and individuals up to US$100,000, along with a five-year jail term.
Lucent has opened eight offices in China, two labs and five research facilities in addition to its joint ventures and wholly owned business. Lucent China’s sales revenue in 2003 accounted for 11% of Lucent’s entire worldwide revenues. Lucent's main customers include China Telecom, China Netcom, China Unicom and China Mobile.
China ranks top 100 electronics component makers in 2003(Apr 12, 2004)
The China Electronics Component Association recently ranked China’s top 100 electronics component makers based on their sales revenue in 2003. The total sales revenue of the top 100 makers was US$7.08 bn in 2003, a rise of 26.25% over 2002. Shanghai Feilo, No.1 of the top 100, reached US$645 million in sales revenue.
Most of the top electronics component makers were located in the Pearl River Delta, the Yangzi River Delta and Bohai seas area. Among the top 100 companies, foreign invested companies accounted for 33% of the total revenue and 56.1% of the total exports
To name a few, these companies include Shanghai Feilo, Yongding Group, Hengtong group, Xiamen TDK, Hengdian Group DMEGC, Jiangsu Tongguang Group, Xianyang Pianzhuan Group, Wuxi Jewel Electronics, Hualun Group and NEC-Tokin Electronics (Xiamen).
Vimicro is first Chinese firm to help with mobile processor standard(Apr 12, 2004)
Beijing Vimicro Electronics, a leading Chinese fabless IC maker of digital multimedia processors recently participated in the meeting of the Mobile Industry Processor Interface (MIPI) Alliance held in France to formulate the mobile processor standard. This is the first time that a Chinese company was accepted as a member to work on a technical standard formulation.
MIPI was founded by ARM, Nokia, STMicroelectronics and Texas Instruments to make and promote standards for mobile application processors. New members also include National Semiconductor, Philips Electronics, Samsung Electronics, Siemens, Sony Ericsson and Toshiba.
Vimicro has successfully developed the VXP family of digital multimedia processors which are SoC-based solutions for domestic and international OEMs, including Samsung, Philips, HP, Lenovo, Bird and Tsinghua Tongfang. By the end of 2003, Vimicro had shipped over 10 million VXP digital multimedia processors in the domestic and international markets.
He Jian Technology to open its second fab in Suzhou(Apr 12, 2004)
He Jian Technology (HJTC), a Suzhou-based foundry, is ready to open its second fab in the same city, based on a Digitimes report. The company expects to expand its production capacity to 16,000-20,000 8-inch wafers from the second quarter of this year.
The company announced that it has installed steppers and lithography equipment and will focus on 0.35-0.18 micron standard CMOS processes. It plans to buid six fabs in China over the next ten years.
HJTC’s clients include Infineon Technology, Xilinx, Sunplus and Novatek. Its products cover ICs for consumer electronics products and LCD driver IC production.
Europe, Japan back US gripes on China’s VAT(Apr 5, 2004)
The European Commission recently announced that it would join in the case brought by the US against China's discriminatory VAT rebate policy for semiconductors. Japan has also said that it would seek an end to the discriminatory practice by China, but it has yet to make a formal announcement. China recently agreed to talks on the issue, but no formal agenda has been announced.
China levies a 17% VAT on manufactured goods including semiconductors. However, to encourage local IC production, China rebates most of the VAT payments for domestic producers while continuing to charge the full VAT on imported products. Semiconductors made in China qualify for an 11 percent VAT rebate while chips that are designed as well as made in the country qualify for a higher 14 percent rebate. ICs used in exported products usually qualify for a VAT refund as well, but only after the products have been shipped. As China imports more than 90% of its ICs used for the domestic and export markets, the only companies really happy about this policy are the local chip makers.
According to the US allegations, this policy constitutes trade discrimination against imported products inconsistent with China's WTO "national treatment" obligations. On March 18, U.S. Trade Representative Robert Zoellick requested formal consultations with China under the World Trade Organization's (WTO) Dispute Settlement procedures. On April 1, the EU Commission announced that it had requested participation in that case as an interested third party.
Grace Semi to seek overseas IPO(Apr 5, 2004)
China's Grace Semiconductor Manufacturing Co. hopes to raise US$1.5 Bn in an overseas IPO in late 2004 or early 2005 confirmed CFO, Daniel Wang. According to company reports, Grace has already attracted roughly US$1.2 Bn in investments (second only to SMIC in China) from bank loans and strategic partners such as Silicon Storage Technology Inc. (SSTI), a Sunnyvale, Calif.-based company that makes flash memory products.
One of 5 Chinese foundry companies that offer 8-in IC production, the company plans to raise production to 27,000 wafers in December from about 6,000 in March to meet strong domestic demand. Grace plans to use part of the expected IPO proceeds to build a second eight-inch wafer production line which could produce as many as 18,000 wafers each month by 2006. Equipment for this second fab will cost about $1 billion, Wang said. A $3-billion fab to produce cutting-edge 12-inch wafers is also on the drawing board that could compete directly with SMIC’s Beijing-based 12-in fab due to come on-line later this year.
Dow Jones recently reported that rivals CSMC Technologies Co. of Wuxi, Jiangsu Province, and Shanghai Huahong NEC Electronics Co. are also queuing up for international public offerings as early as this year.
China’s Websites up 60.3% YoY(Apr 5, 2004)
China’s approved websites increased by 60.3% to approx. 600,000 by the end of 2003, said a report issued by the China Internet Network Information Center (CNNIC). However, about 90 percent of the websites were in east, north and south China provinces, showing a growing gap between rich regions and less developed regions.
Beijing, Guangdong province in the South, east China’s Zhejiang province and China’s economic hub, Shanghai, ranked in the top four for numbers of websites, accounting for 56.8 percent of the total, the report said.
Meanwhile, online comments and opinions from internet users attract much more attention from government officials than ever before according to a recent article in the People’s Daily. In Shenzhen, the local legislature recently issued a circular on www.shenzhen.net.cn asking citizens to contribute suggestions for its legislative work in 2004. And, in Beijing, the municipal government has posted a notice on www.beijing.gov.cn, soliciting public views on 56 major public undertakings planned for 2004.
Computers linked to the Internet had reached 30.89 million by the end of 2003, up 48.3 percent, said the CNNIC report.
Hisense to co-develop STBs with USDTV(Apr 5, 2004)
Qingdao-based Hisense recently announced plans to invest US$60 Mn in US Digital Television (USDTV) to become a minority investor and to make 400,000 set top boxes for the US digital TV market. The products will be co-branded and marketed at Wal-Mart in the US according to Richard Johnson, USDTV COO.
With the Set-Top-Box and Digital TV markets starting to heat up in China, the move by Hisense helps to put them in a competitive position in China’s domestic market as well. Earlier this year, Hisense invested in the Qingdao Cable Network to secure its STB market and future DTV markets. The new investment should help them with their next generation of products. We look forward to working closely with USDTV, especially in the co-development of integrated LCD and plasma TVs, said Shumin Yu, Hisense President.
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