According to Yu Zhongyu, secretary general of China Semiconductor Industry Association, thanks to policy encouraging the chip and software industries, China has sped up the production of chips.

Five highlights

There are hugely expanding industrial scale, constantly enhanced technological level, continually strengthened innovation capability, increasingly rational industrial structure and pace-setters springing out.

China's chip industry grows at an average annual rate of over 40 percent, according to reliable statistics. In the first half of 2004, the aggregate of China's chip market reached 137 billion yuan (US$16.6 billion), a year-on-year increase of 36.4 percent. The total output exceeded 9.4 billion pieces, 54.7 up from the previous year and earnings increased by 7.5 percent to 23.7 billion yuan (US$2.9 billion).

The industrial structure turns more and more rational and chip manufacturing has grown to be the main engine of the growth of the entire industry. In the first half of 2004, 7.38 billion yuan (US$891 million) has been sold by manufacturers, a year-on-year increase of a record 182 percent; 2.4 billion yuan (US$290 million) by designers, up 65 percent; 13.9 billion yuan (US$1.7 million) in packaging and testing, a growth of 27 percent.

Rapid enhancement has been achieved in manufacturing technique and technology. Particularly, the factory of Semiconductor Manufacturing International Corporation (SMIC) put into production in Beijing pushed China's chips, from 0.25 micron, 0.18 micron, to the world's front of 0.13 and 0.11 micron.

Breakthrough in industrial system and mechanism innovation

The "government-led, enterprise-joined and market-run" layout has just taken shape. Increasing foreign and non-government capital run into beneficial cycle. Presently, over 10 companies have had listed overseas. Among them, SMIC has listed in Hong Kong and New York, touching the nerves of international capital market.

Four bases emerging

Shanghai-led Yangtze River delta boasts the most sound industrial chain and highest level of concentration. Bohai Sea region centering Beijing and Tianjin has an edge in development and brains. Zhujing River delta circling Guangzhou and Shenzhen is China's largest manufacturing and exporting base of information products. The southwester region with rich human resources, power, water as well as traditional foundation of electronic industry. As packaging enterprises of Intel and SMIC settle in Chengdu and Infineon R&D Center in Xi'an, the chip industry there starts rising.

China to be the second largest chip market

With the most fast-growing chip industry the most potential, China will become the world's second largest chip market just following the United States in 2010. As the market expands, industrial scale upgrades, technological level enhances, a slew of name brands with international competitiveness will stand out.

Leaping China chip still left behind

China still lags behind world's front runners as its leaping industry can hardly catch up with the whole information industry. The 36-billion-yuan (US$4.3 billion) output only accounts for two percent of the total of the information industry. Domestic market share less than 20 percent; comparatively incapable of independent innovation as the key equipment, IP core, key raw materials have to be imported; uncoordinated chain development in the lower reach; interaction between chip and computer badly in need; a lack of name brands and enterprises with international competitiveness.

The whole industry is still developing and crying for nation's support.

(People's Daily September 10, 2004)