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Round-up Report
ARCHIVES OF CHINA MARKET FLASH
DECEMBER 2003
China-based foundries to raise ASPs in Q104 (Dec 29, 2003)
China-based foundries expect to raise their average selling prices (ASPs) by 5-10% in the first quarter next year, according to Digi-times.
Because of high demand in LCD driver ICs, handset DSPs and Controller ICs for digital cameras, Chinese foundries, including Shanghai Hua Hong NEC Electronics (HHNEC), Advanced Semiconductor Manufacturing Corporation (ASMC) and He Jian Technology, have recently raised their manufacturing prices by 3-5% for 0.25- and 0.18-micron processes.
At present, these China-based foundries have been running at very close to 100% capacity. Some of them, like ASMC, are thinking about expanding their production capabilities.
China offers SMS between fixed line and Mobile phone subscribers (Dec 29, 2003)
China Telecom, China Netcom, China Mobil, China Unicom and China Railcom recently signed an agreement to enable the exchange of SMS between fixed phone lines and mobile phones before the end of March, 2004, according to the Xinhua News Agency.
This exchange of SMS services will offer huge convenience to both fixed line and mobile phone users and, at the same time, it will enhance cooperation as well as competition among telecom operators and service providers.
Since Chinese people love sending SMS’s through their phones (from Jan to Nov, 122.4 billion pieces of SMS were sent between mobile handsets), this agreement could be a boon for both telecom operators and service providers.
China’s foreign trade to reach US$840 Bn (Dec 29, 2003)
China’s foreign trade is expected to rise 35% year-on-year to reach US$840 billion in 2003, according to Yu Guangzhou, vice minister of Ministry of Commerce , at the national commerce conference.
Through the end of November, China’s electronics imports hit US$106 billion, accounting for 25.8% of China’s total imports. China’s electronics exports reached US$113 Bn, accounting for 26.3% of China’s total exports.
Yu also stated that in order to boost China’s economic growth, China needs to build a modern market system, optimize the import and export structure, improve the foreign investment environment to attract more foreign manufacturing and R&D centers and encourage local Chinese companies to invest outside of China in order to build partnerships with developing countries.
Huawei wins Sunday’s 3G contract (Dec 22, 2003)
China’s leading telecom manufacturer, Huawei Technologies, announced that it won a US$115 million bid to build the W-CDMA network for Sunday Communications, a HK-based mobile operator with 600,000 subscribers. The 3G network is expected to cover the entire Hong Kong territory, including Hong Kong Island, Kowloon, the New Territories and other outlying islands.
Sunday’s decision to use Huawei instead of other big telecom equipment manufacturers is partly because of their focus on the Mainland market. With the Huawei partnership, Sunday could have a greater chance of seamless migration with the Mainland’s network and with TD-SCDMA in the future. Sunday expects to launch 3G services in Hong Kong late in the third quarter of 2004 or early in the fourth quarter.
The deal with Sunday is Huawei's first publicly announced 3G win. Currently, Huawei has built over 20 trial W-CDMA networks with operators inside and outside China. Huawei hopes that this win will help it to enhance its international reputation.
China’s Mobile subscribers break 263 million (Dec 22, 2003)
China’s phone users reached 523 million at the end of Nov, a year-on-year increase of 103 million users, according to data from the MII. Mobile subscribers reached 263 millions while fixed line users were 260 million. November’s new mobile subscribers amounted to 6.54 million.
SMS is one of the main drivers of China’s rapidly developing mobile phone business as Chinese consumers just can’t get enough of them. 122.4 billion short messages were sent in the first eleven months which amounts to 2.8 billion SMS’s more than the entire SMS traffic sent in 2002.
China’s IT market to climb 18% in 2004 (Dec 22, 2003)
China’s IT demands, including infrastructure, software and services, are expected to climb 18% in 2004, reaching US$29.4 billion. This accounts for 35% of Asia-Pacific’s demand (ex Japan), according to a recent IDC announcement.
The three components of IT demand in 2004 break down as US$20.4 Bn in infrastructure equipment, $3.27Bn in software and $5.69 Bn in IT services.
Gobi Fund has DoCoMo’s 9.4M investment(Dec 22, 2003)
Gobi Partners, a venture capital firm and NTT DoCoMo, a leading Japanese mobile communications company, recently signed an agreement confirming that DoCoMo will invest US$9.4 million in the Gobi Fund.
To date, Gobi Parnters has received US$30 million for its fund which is ready to invest in China's companies in the digital media field such as telecommunication and internet broadcast in terms of content creation, delivery, access and applications. IBM and HK-based Goldbond are other leading investors in the Gobi Fund.
The fund will operate for eight years with a target of raising US$75 million for venture investment.
AMD teams with Founder to establish Chinese platform lab(Dec 15, 2003)
AMD and Beijing University backed Founder Group announced the establishment of a new platform development lab in Beijing on Dec. 10. The lab aims to integrate and develop products targeting at information appliances that go beyond the PC market - initially focusing on home digital media centers. Product design will emphasize practical applications and ease-of-use.
AMD will provide technical know-how and resources, including development tools, products, dedicated engineering support, and reference design kits while Founder will be providing infrastructure, technical expertise and engineering staff among other things to the lab.
This win-win effort should benefit AMD by speeding the AMD Alchemy™ and AMD Geode™ solutions into the China market and should help China Founder Group’s corporate brand recognition in the international market.
MediaTek to introduce 3rd Generation DVD player chip(Dec 15, 2003)
Taiwan-based MediaTek Inc. introduced its 3rd generation DVD player SoC--MT1389 on Dec. 9 using 0.18-micron process technology. This new chip combines MDDi technology, supports DivX-Pro MPEG4 Video playback and is compatible with various kinds of MPEG4 profiles and video files.
According to MediaTek, the chip is the world’s first RTF-integrated DVD SoC that supports playback of DivX Pro MPEG4 video, including versions V3.11, V4.X and V5.X. Also, this new chip supports GMC(Global Motion Compensation, one-point), Q-pel and post-processing from the DivX Pro codec, and the latest Divx DrM (Digital Right Management) system that will enable on-line movie purchases in the future.
As a leading system solution provider of optical storage and digital consumer semiconductors, MediaTek is one of the world’s top 10 fabless IC companies and one of the world’s largest chipset supplier of CD-ROM, DVD-ROM. CD-RW, Combi and DVD player.
UTStarcom to launch two PAS handset models in China(Dec 15, 2003)
UTStarcom, Inc. launched two PAS(Personal Access Service) handset models recently to satisfy China’s high-end market: the UT728 and the UT 610. PAS is one of the major technologies that supports China’s unique Xiao-Ling-Tong wireless local loop applications. It has limited mobility and speed, but it fills the needs of the low-end mobile market.
According to the company, the UT728 has a built-in camera with flash, 65,000 TFT color display and high quality voice service along with value-added data services including Chinese/English SMS, 64kbps Internet access and email functions. The UT610 is a fashionable, clam-shell designed phone with similar functions to the UT728.
UTStarcom provides more than 15 different types of PAS handsets to meet the needs of its growing customer base in the Chinese market. It has established 653 customer service centers nationwide to offer technical support and maintenance. At present, there are more than 20 million PAS service subscribers in China using UTStarcom’s technology through China Netcom and China Telecom. The total number of PAS subscribers in China is estimated to be 32 million.
China’s IT exports to rise 41.2% in 2003(Dec 8, 2003)
The exports of China’s electronics and IT products’ are expected to rise 41.2% year-on-year to US$130 billion in 2003, according to a recent announcement at China’s electronics and IT industry performance conference conducted by MII in Hefei, Anhui Province.
From Jan to Oct. this year, China’s electronics and IT exports reached US$109.8 billion - 51.3% growth compared with the same period last year. Electronics and IT products account for 31.5% of China’s entire exports. Multi-national corporations’ (MNC) large-scale transfer of their manufacturing and R&D operations to China constitutes the main force driving this growth.
At present, MNCs’ Chinese operations account for 23% of all the electronics firms in China, but they generated 82.7% of IT exports and 68% of China’s electronics industrial output.
Motorola Ventures invests in Shanghai(Dec 8, 2003)
Motorola Inc. recently announced that Motorola Ventures invested in Shanghai New Margin Venture Capital Co., Ltd - China’s premier venture capital management fund. This is Motorola Venture’s first investment in a China-based venture fund.
Since Shanghai New Margin Venture Capital Co., Ltd focuses its investments in China’s high growth businesses and high-tech businesses especially in the IT technology and telecommunications fields, this investment should help Motorola to access China’s developing venture capital market and seek potential business opportunities.
As “an early bird” who started to explore China’s market early in 1987, Motorola enjoyed the market truth of “the earlier, the better”. So far, the entire Motorola’ investment in China has reached USD3.4billion. With its investment target of US$10 billion to China, Motorola Ventures’ investment walked a big step for Motorola’s entire China business strategy which will entail IT technology, telecommunication and Venture investment as its three main business streams in China.
ST and TI to launch a new CDMA2000 1X solution(Dec 8, 2003)
STMicroelectronics (ST) and Texas Instruments (TI) worked together to create a flexible and open solution supporting the CDMA2000 1X standard for wireless communications. Based on the two companies’ announcement, the new solution simplifies design and speeds time-to-market while reducing power consumption, component count, board space and bill of materials costs for handset manufacturers.
With this solution, TI supplies the digital baseband and radio frequency (RF) receiver and transmitter ICs while ST provides the integrated analog baseband and power management devices.
This new solution will provide another choice for handset makers other than the original solution developed by Qualcomm. China’s telecom manufacturer Huawei partnered with Qualcomm to develop a CDMA2000 1x EV-DO 450MHz end-to-end solution this Nov. by using a CDMA handset and trial system equipment provided by Huawei. It is too early to tell whether Huawei or other Chinese handset makers will adopt the new solution.
Philips to launch MPEG-2 codec for DVD recorders(Dec 8, 2003)
Philips recently announced its single-chip MPEG-2 codec for DVD: Nexperia PNX7200. The company expects to have the 0.12-micron technology chip available by the 1st quarter of 2004 enabling a low cost system solution with a BOM reduction of up to 30%.
As China is the world’s biggest DVD market with many mature DVD makers, Philips has used various strategies to move into the Chinese market. For instance, by providing its DVD+RW burner technology to Chinese clients, it partnered with TCL and also offered licenses to other Chinese makers including Malata Group, Sichuan Changhong, Skyworth group and Jiangsu Shinco Electronics group.
The Nexperia chip is just another China-focused DVD solution that should help Philips gain market share.
China domestic PC sales to soar(Dec 1, 2003)
China’s personal computers (including desktop, laptop and server) sales reached 3.11 million units in the third quarter, up 21.2% year-on –year, based on a CCID report.
The growth was driven by the jump in e-commerce and e-government projects, growing consuming confidence and reduced prices due to competition. Increasing evidence has shown that the negative impact of SARS has disappeared. Consequently, corporate and personal spending has come back in the second half of this year.
Notebook computers are the fastest growing product among all PC products, with a 2.5% rise in PC market share year-on-year to 8.8% - about 273,680 units. CCID expects that PC sales in the fourth quarter will rise 17.2% over the third quarter to 3.65 million units.
Sino-Philips joint venture works on power semiconductors(Dec 1, 2003)
Philips Electronics, one of the largest suppliers of power management components in the world, recently announced a joint venture with China’s Jilin Sino-Microelectronics (JSMC)-one of the largest power transistor makers in China. JSMC’s products are widely used in TVs, telecommunications equipment and computer products. The new JV will develop, design and manufacture power semiconductors.
Philips and JSMC will work together to serve the global bipolar power market. This joint venture, expected to start business operations by mid-2004, will produce bipolar power chips, ranging from Epitaxial Diodes, Deflection Transistors, Damper Diodes, Triacs and Thyristors used in consumer electronics, white goods, lighting and power supplies.
China ZTE to set up ADSL in Athens Olympic(Dec 1, 2003)
ZTE, a Shenzhen-based Chinese telecom equipment manufacturer, has won a broadband networking equipment contract from Greece for the communications infrastructure of 2004 Olympic Games. ZTE will provide ADSL networking equipment and also build and test the network in 16 Olympic venues in Athens.
As a turn-key service provider, ZTE will ensure the quality of service between Olympic villages, sport stadiums, radio and TV broadcasting, press centers and security surveillance centers.
Being the number 2 Chinese telecom equipment manufacturer, ZTE is increasing its global presence. The company has attained rapid export growth focusing on developing countries as target markets. Twenty-five percent of its sales are expected to be generated from exports in 2003.
