Click for
Round-up Report
July 2004
China manages $130 bn electronics sales by June end (July 26, 2004)
China’s electronics sales grew 44.5%, reaching $130bn by June end, according to the Ministry of Information Industry(MII). Electronics import was $81 bn while electronics export was $88 bn, up 53% and 55% YoY respectively. Electronics export weighted 68% of the overall electronics sales. The drivers of export are primarily communications, networking and PC products. Networking products are emerging and fast growing sector, based on the data from China customs.
Regarding the economic performance of companies, the total profit was $5.1 bn which was 3.9% of the sales. The profit has declined 4.2% compared with the same period of last year, mainly caused by price drop at handsets and PC products, as well as component price increased due to general short supply, based on the MII report. The anti-dumping sanction case at TV sets also dragged down prices of domestic sales because commodity TV sets can virtually no long export to the US market since Q2 this year. The MII statistic department reported that average TV price dropped 10% in Q2.
Haier doubles its export in the first half of 2004 (July 26, 2004)
Haier has exported $530 million white goods and other consumer electronics products in the first half of this year, representing 107% YOY growth, according to the China customs.
Being the No. 1 electronics company in China ranked by the MII, Haier has exported almost 6% of the whole nation’s electronics exports. All exported products from the company are with its own brand. The company is one of very few Chinese electronics manufacturers that only focus on OEM module without carrying out any EMS/ODM service.
The company has managed 65% of exports in Qingdao facilities, Shangdong province where its headquarter was located, and managed another 35% in its Dalian factories, Liaoning province. According to the company press release, Haier has owned 50% market share of small refrigerator in the US market; it aims at getting 10% of market share of double-door large refrigerator in the US market in next 5 years.
Through using the top 10 retail chains in any destination market, Haier has managed 85% of sales. In addition to control its product quality, the company is pushing niche product design strategy such as student refrigerator in the US, woman refrigerator in Japan and wine-storage in Asia (no basement in Asia). This approach has helped Haier to expand itself successfully not only in China but also outside China.
Legend cuts executive paychecks (July 26, 2004)
Legend Technology, China’s No. 1 PC Company, has cut 40-50% of its executive compensation due to the slower than expected profit growth. The company chairman, Chuan Zhi Liu confirmed that Yuan Qing Yang, CEO of the company will make less than half of what he made in 2003. The company reached $126 million net profit which was 2.6% of its revenue ($4.86 bn) in 2003. This was below the industry average (3.9%), according to the Ministry of Information Industry.
Since the company took some major restructurings in the Q1, Liu believed that Q2 would bring much more improved return to investors. At an investor briefing in Hong Kong, Liu unveiled that Legend could manage 20%-30% profit margin at handset business, but he did not disclose any detailed profitability of handset business.
SMIC sets up its packaging and test facility in Chengdu(July 19, 2004)
Semiconductor Manufacturing International Corporation (SMIC) recently signed an investment agreement with Chengdu government with regard to opening a packaging and test factory in Chengdu hi-tech zone, Sichuan province. SMIC will invest US$175 million and the new factory is expected to start construction before the end of 2004 and to be in fully operations by the end of 2005.
Being the biggest chip maker in China, SMIC owned four 8-inch fabs in total and one 12-inch fab under construction. In March 2004, SMIC successfully listed its IPO on the New York Exchange and the Hong Kong Exchange and raised nearly US$1.8bn to invest in its expansion in the process.
SMIC was ranked as one of the best foundries in the world by Semiconductor International in 2003.
China and U.S sign MOU on VAT(July 19, 2004)
China and the United States signed a memorandum of understanding (MOU) on the value-added tax (VAT) issue which has been a hot spot since last Nov. Based on the MOU, China will stop (VAT) rebates to domestic semiconductor makers by April 2005.
China levied a 17% percent VAT on imported and local made chips but local makers can be able to get as much as 14% rebates. China's rebates policy is open to all companies willing to set up manufacturing operations in China. VAT rebates aimed at attracting more international semiconductor makers to set up their China operations and support more local IC design and manufacturing.
This MOU remarks the end of VAT rebates on semiconductor produced in China.
TCL increases its TV and PC sales in June(July 19, 2004)
TCL Corporation, one of the biggest TV and handset maker in China, announced its sales growth of up to 40%-49% YOY at TV and PC products.
Due to the cooperation with Thomson, in June, TCL’s overseas shipment of TV reached 505 thousand units, up 48.5%. At the same time, TCL sold 56 thousand PC units, up 59.2% YOY. However, the handset sales dropped 22.7% in June YoY, reached 650K shipment. Tight supply of key handset components was the key reason of the slow-down.
TCL expects to achieve US$6.25bn sales revenue in 2004 including US$2bn exports.
Secom teams with Silicon Laboratories(July 12, 2004)
Secom Telecom (Shenzhen, Guangdong), China’s leading electronic component distributor, has recently signed a franchise agreement with Silicon Laboratories to distribute Silicon Laboratories’ MCU products. This cooperation allows Secom Telecom to provide more comprehensive solutions together with its current franchised lines-- Agilent, Actel, Rogers, Micrel and Hittite Microwave.
Silicon Laboratories is a fabless semiconductor company with specialization in designing and developing analog intensive, mixed-signal IC for consumer, industrial, automotive and communications products including wireless handsets, digital video recorders and central office equipment. It has provided IC products for Huawei Technology and TCL Corporation.
Secom believes the new line will accelerate the company’s growth at communications market and emerging markets such as auto electronics and industry control
Oki Electric opens two new semiconductor offices in China(July 12, 2004)
Oki Electronic Industry announced on July 12, 2004 that it has opened two new semiconductor offices in China to enhance customer support and marketing activities. The two offices locate in Beijing and Shenzhen, aiming at reaching a target of 50 billion yen for its semiconductor sales in China by the fiscal year ending March 2006; a three-fold increase from that of sales in the fiscal year ending March 2004.
"Establishing the two offices will enable us to further enhance our marketing activities and to provide products that suit the Chinese market," said Akira Kamo, President of the Silicon Solutions Company at Oki Electric. "In addition, by enriching the technology support structure in the product development, we can respond quickly and carefully to various needs from the local manufacturers."
At present, Oki has four semiconductor offices in China which are in Hong Kong, Shanghai, Beijing and Shenzhen. The company has been expanding sales in the Chinese market particularly in LSI area for personal handy-phone system ( Xiao Ling Tong), mobile phones, and memory chips for electronic dictionaries and toys.
China exports 51.01million handset in first 5 months(July 12, 2004)
China exported 51.01 million handset units till May end, up 57.7% compared with the same period of last year, based on the statistic data from China Customs.
Motorola's exports of GSM and CDMA mobile phone units made up 26 percent, and 62 percent of China's total exports, respectively during the five month period. Siemens took 12 percent of the share of China's GSM mobile phone exports. Other major GSM handset exporters include Nokia and Ericsson while Motorola, Samsung-Kejian, Langchao-LG, Hangzhou Eastcom accounted for most of CDMA handset exports in China.
China’s local handset makers are still minor players in export market. The No. 1 local handset maker, Bird, exported only 2% of China’s total GSM exports. China’s handset makers still face big challenges of technology development, being recognized and accepted by the international markets.
Sony Ericsson to make a R&D hub in China(July 5, 2004)
Sony Ericsson Mobile Communication (SEMC) recently announced that it took control of Beijing Ericsson Putian Mobile Communication (BMC), by raising its share holding to 51%. The acquisition has got the approval from the China’s Ministry of Commerce. SEMC aims at using BMC as a research and development hub to serve the Far East market, especially the China market.
It has been a trend for foreign companies to increase their stake shares in JV to gain more controls after the deregulated policy from Chinese government. There is no more 51-49 restriction at JV company ownerships.
“We have focused on building our presence in this competitive and strategically important market," said Miles Flint, Sony Ericsson's president. "We are committed to expand our business in China through increasing the investment in BMC and expansion of China-based R&D activities to support growth both globally and locally."
Sony Ericsson is the fifth-largest cell phone company in the world. In the first quarter of 2004, the company earned $98.7 million, comparing lost of $128 million in the same period last year.
Microsoft enlarges its research spending in China(July 5, 2004)
Bill gates, Chairman of Microsoft said on last Thursday during his business trip to China, Microsoft will spend more of its annual research and development budget (about US$7 billion) in China. He also indicated that its Beijing development Lab is one of the most successful practices.
The company believes that mobile phone market and wireless devices are critical to Microsoft’s future business success. China’s mobile users bypassed the US users in April this year making China the largest such market in the world. Since Microsoft has been challenged by London-based Symbian partially owned by Nokia in the China market, to increase investment and develop focused products will be important strategies for the company to compete with the No 2 market share holder in China (The top three market share holders in China handset market are Motorola, Nokia and Ningbo Bird.).
This is Bill Gates’ fourth China trip within three years. During this trip, Bill Gates met with Chinese government officials, business leaders, experts and senior managers.
SIM-BCD to start an 8-inch fab in Shanghai(July 5, 2004)
SIM-BCD, a shanghai based biplolar foundry service provider, will start an 8-inch fab in the Changzhou National Hi-tech District to offer bipolar, BiCMOS and bipolar CMOS/DMOS processes. The new fab will be 0.5 micron bipolar process.
SIM-BCD is a joint venture of BCD Semiconductor (Bermuda) Holding Company and Shanghai Institute of MicroSystem and Information Technology (SIM). The company has one 6-inch bipolar fab with monthly production capacity of 20,000 wafers and one 4-inch fab that can produce 40,000 wafers per month.
Shanghai SIM-BCD is China's only 6" bipolar foundry that provides Bipolar-Centric High Performance Analog foundry services, offering Bipolar, BiCMOS, and BCDMOS processes with feature size 1um-4um. Since 2002, the company has established several alliances with key industry players from both fabless and IDM's. Major customers are from Japan, US, Taiwan and Mainland China and they can view their wafer status via the company’s CIM E-service. The newly start of 8-inch fab will enable SIM-BCD to serve more customers at a broader level.
To Market Flash Archives
