Semiconductor consumption in China is expected to maintain a year-on-year growth of around 30 percent over the next two years, providing business opportunities worth tens of billions dollars for international chip companies, according to sources at the ongoing Ninth International IC-China Conference and Exhibition (IIC-China).

The total value of China's consumption of semiconductor products is expected to reach US$37 billion in 2004, an annual increase of 30 percent, according to statistics released yesterday at the conference by independent research firm Gartner Inc.

The country's chip market is expected to grow an additional 27 percent to a value of US$47 billion next year, and foreign chips are likely to represent around 90 percent of the consumption in the coming two years, according to Gartner.

The annual conference was opened in Shanghai on Monday by NASDAQ-listed Global Sources, attracting more than 100 notable technology companies, such as Agilent Technology, Intel, EPSON, Microsoft, Texas Instruments, Philips, Sharp, Samsung and Analog Devices to showcase their latest integrated circuit (IC) technologies.

"It is the largest in the event's nine-year history," said Global Sources Electronics Business Unit President Mark A. Saunderson. "China now has the full attention of the world's leading semiconductor vendors."

"No other market presents as much potential as China."

China's strong chip consumption is driven by the country's fast-growing electronics manufacturing industry.

The Ministry of Information Industry predicts that the nation will produce 62.9 million colour televisions, 24.8 million digital cameras, 20.1 million desktop PCs and 173 million cell phones this year.

The value of electronics in China will grow 14 percent this year to top US$162 billion, according to Gartner.

China will represent as much as one-third of the global electronics industry by 2005, the ministry forecasts.

As a result, China's IC industry cannot meet such a high market demand, with IC designs especially lagging far behind foreign companies, experts at the conference pointed out

"The mainland's IC design industry can only be compared to what it was 10 years ago in Taiwan," said Yorbe Zhang, editor of Electronic Engineer Times-China, which is the official publication of the conference.

But at the same time, the country has also made significant progress in the chip design industry in recent years, such as the launch of the universally-applied CPU, called the "Dragon Chip," and the digital signal processor (DSP) chip "Godson," Zhang pointed out.

Sources with the conference also revealed that the first cellphone chip product designed for TD-SCDMA, the homegrown third-generation (3G) mobile communication standard, will be available later this year.

"The chip is expected to be worked out within this year, and the developer is a joint venture company based in Shanghai called Commit," said Desmond Wong, Asia e-Marketing and Communications Director of Texas Instruments, one of the investors in the joint company.

Analog Devices, another exhibitor from the United States, revealed yesterday that the company has recently reached an agreement to set up a joint venture focusing on mobile phone chips with TCL, one of China's electronic manufacturing giants.

(China Daily March 3, 2004)