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Round-up Report
March 2004
China Supply Chain Conference pushes for change(Mar 22, 2004)
The 2004 China Supply Chain & Material Information Management Conference was held on March 17-18 in Shanghai in conjunction with Electronica and Productronica 2004. The two days’ conference attracted 300 delegates to exchange viewpoints on China’s urgent need to upgrade the efficiency of its supply chain to remain globally competitive.
Organized by the China Electronics Enterprise Association (CEEC) and China Electronics Purchasing Association (CEPA), the conference combined Chinese OEM/EMS providers, local and international suppliers and research firms to discuss building efficient and effective supply chains in China.
The Deputy Minister of MII, Mr. Zhong Wen Gou gave a speech at the conference to explain the urgent supply chain issues of Chinese companies. He stated that the “Chinese government will do anything possible to improve the supply chain in the structuring of technical standards.”
Other speakers were from Arrow, Avnet, Microsoft, ISM (Institute for Supply Chain Management), Dell, RosettaNet China, Global Exchange Services, Cisco, as well as Chinese ERP software developers Kingdee and UFSoft.
Acer announces support for China’s WAPI(Mar 22, 2004)
Acer recently announced its support for China’s WAPI by launching products in compliance with the WAPI standard, according to a DigiTimes report.
The Taiwan-based company will work with Chinese manufacturers to release WAPI-based notebooks before June 1. Acer owns 25 China branch offices and aims to double its notebook sales in China to 136,000 units in 2004.
There were 1.2 million units notebook sold in China in 2003. The MII forecast the sales will grow 25% to reach 1.5 million units in 2004.
SMIC raises $1.8 Bn on NYSE and SEHK(Mar 22, 2004)
Semiconductor Manufacturing International Corporation (SMIC), China’s leading IC foundry, successfully listed its IPO on the New York Stock Exchange (NYSE) on March 17 and the Hong Kong Stock Exchange (SEHK) on March 18, raising nearly US$1.8 Bn to invest in its expansion in the process.
As one of the fastest growing foundries in China and the world’s 5th largest, SMIC is actively seeking money to expand its production capacity and getting publicly listed was one of its main objectives in raising money. Through the end of 2003, it achieved 49,000 8” wafers per month, which is the largest manufacturing capacity in China.
Based on a DigiTimes report, because of the lower costs and direct access to the China market, plus the fact that TSMC and UMC’ s production lines have been fully booked through the first three quarters of this year, SMIC has a chance to gain orders from Taiwan Design Houses like Elite Semiconductor Memory Technology and Progate Group Corporation. George Wu, a senior analyst at Primasia Security in Taipei indicated that SMIC’s prices were at least 20% lower than its Taiwanese competition, which might attract more orders from Taiwan design houses to outsource their IC production to SMIC.
It will possibly be up against tough competition though, as a recent report by Merrill Lynch analyst, Dan Heyler, suggests that SMIC’s high depreciation costs relative to its Taiwanese rivals, UMC and TSMC, might put it at a disadvantage going forward. The analyst went on to say that the main cost advantages for SMIC were in tax as China offers big discounts on its 17% VAT when ICs are produced locally. With the recent WTO case against China filed by the US trade representative, this tax advantage could prove short-lived.
Thomson inks DVD licensing pact in China(Mar 15, 2004)
Thomson, a global leader in integrated solutions for the entertainment and media industries, recently signed a strategic Memorandum of Understanding (MOU) with two leading Chinese industry associations to license its technology to make DVD players.
The two associations are the China Audio Industry Association (CAIA) and China Chamber of Commerce of Machinery and Electronics for Import and Export (CCCME).
Based on the MOU, all members from these two associations can use Thomson’s patented DVD technology in making DVD products for both the domestic market and for exports. The MOU will strengthen Thomson’s licensing business by having more than 60 Chinese DVD manufacturers as its licensees.
Intel won’t play with China’s WAPI – for now(Mar 15, 2004)
Intel will stop selling its Centrino chips in China after June 1. Based on a Reuters report, Intel won’t support China’s WAPI standard since it is unable to find an appropriate solution to meet the needs of both Intel’s product quality standards and China’s WAPI standard at the same time.
China’s WAPI (WLAN Authentication and Private Infrastructure) standard requires all WLAN products sold in China to be compliant with the China-made encryption standard and certified by the Chinese authority beginning June 1, 2004.
China is Intel’s second biggest market. The company has invested nearly US$1 Bn in two Chinese chip plants. However, it remains to be seen whether Intel’s decision will encourage other chip makers to take a more tentative approach in China or give Intel’s competitors, such as AMD, a great opportunity to develop China’s WLAN market.
Mentor Graphics enhances Chinese IC design efforts(Mar 15, 2004)
Mentor Graphics Corporation, a world leader in electronic hardware and software design solutions, just signed a memorandum of understanding (MOU) with China’s Ministry of Education (MOE) to help the country to cultivate IC design engineers.
Based on the MOU, Mentor Graphics will provide the latest EDA products, develop high quality IC design courses and hands-on training for China’s top universities. The universities covered include: Beijing University, Tsinghua University, Zhejiang University, Huazhong University of Science & Technology, Fudan University, Jiaotong University, Southeast University, Xidian University, and Chengdu Electronic Science & Technology University. Courses and training programs include Mentor Graphics® FPGA design flow, analog/mixed signal and RF IC design flow, physical verification, design-for-test, and printed circuit board (PCB) tools for system design and high speed applications.
China aims to increase its IC design capabilities by boosting its design engineering talent pool at the country’s top universities. The cooperation between the MOE and Mentor Graphics is seen as an important step and critical to the future of China’s electronics industry.
China targets 170 million handsets for 2004(Mar 8, 2004)
MII recently announced that China will make 170 million handsets in 2004, with about 100 million handset units for the export market. Domestic producers such as Bird, Konka and TCL are looking to grab a larger percentage of those export totals as they accounted for less than 2% of exported handset units in 2003.
China expects to have 52 million new mobile subscribers in 2004, achieving a total installed base of 321 million mobile subscribers. The mobile phone penetration rate in China is expected to be 24.5%, 0.1% more than the comparable fixed-line phone rate in China.
Samsung establishes LSI R&D center in China(Mar 8, 2004)
Samsung Electronics, a global leader in the electronics industry, recently opened an R&D center for system large-scale integration (LSI) semiconductors in Hangzhou, a city in the Yangzi River Delta, based on Asian Pulse report. This is Samsung’s second semiconductor R&D center in this area after establishing its first R&D center in the neighboring city of Suzhou.
This newly built center aims to strength Samsung’s competitive position in the worldwide IC market and to expand its China sales of system LSI chips to US$400 million in 2004 according to a report by Asia Pulse/Yonhap. Samsung also aims to substantially increase the number of its LSI system products to ten, from its current offering of two, by 2006.
System LSI chips are a mainstay non-memory chip for LCD Driver ICs (LDI). Samsung has claimed 25% of the global LDI market in the last two years.
Chinese government invests US$1.88 Bn on R&D projects in 2003(Mar 8, 2004)
The Chinese government invested US$1.88 billion (RMB 9 billion) on 15,000 national research and development projects in 2003, according to China’s Ministry of Science and Technology.
These projects focused on ICs, computer software, high-performance computers, high-speed networks, bio-chips, genetics, automobile electronics, robotics, recyclable energy and advanced materials. Over 300 technical standards have been formulated from these projects and there is a growing belief that China will push hard to make these the accepted domestic standards with some becoming international standards at the same time.
About 60% of the investment was put into R&D for semiconductors, biotech products and e-government projects.
China’s Top 100 Electronics Firms grow 18% in 2003(Mar 1, 2004)
The MII ranked Top 100 Chinese Electronics Firms grew 18% year on year to achieve US$77 bn of revenue, making up 34% of China’s total 2003 electronics sales. Communications & networking companies were tops in revenue growth and profitability while consumer electronics companies racked up the slowest growth.
Among the top 100 China Electronics Firms, there are 24 in computer-related fields, 19 in communications & networking, 20 in consumer electronics, 7 in industrial electronics and 30 in components & electronics materials. Haier topped the Top 100 China Electronics Firms with US$9.65 bn in revenue in 2003. For further details on China's Top 100, please view the March issue of China e-Outlook.
CEC targets 20% revenue growth in 2004(Mar 1, 2004)
China Electronics Corporation (CEC) recently announced that it is targeting US$4.35Bn in revenue in 2004 - 20% growth over 2003.
CEC is an example of the “over-night companies” in China which took over all previous electronics ministry-owned R&D and manufacturing facilities in 1989. It is a state-owned holding company and is regarded as part of China’s privatization process. Many large companies are part of CEC such as China Software Technology Corporation, Shanghai Huahong Group, Amoi electronics, Shenzhen Sangda Electronics, The North China Computer System Engineering Research Institute and China Electronics Export & Import Corporation.
Its main products include communications & networking, computers, IC design and production, software development, industrial automation and optical electronics products.
IC companies eye China’s automobile electronics market(Mar 1, 2004)
To increase market share and improve their brand image in China’s automobile electronics industry, leading IC companies are actively cooperating with China’s universities. Motorola, the largest automobile IC supplier, set up labs with Shanghai Tongji University to enhance its research on 8bit, 16bit and 32bit MCU, DSP, Analogy IC and sensor products. Infineon also established a lab with Shanghai Tongji University focusing on the research of electric cars. It also announced its aggressive aim of doubling its market share to 10% in China in the next 5 years.
China’s automobile output reached 4.3 million units in 2003 and will target 5.1 million units in 2004. CCID predicted that China’s automobile electronics demands will grow 40% in both 2004 and 2005.
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