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China and the Growth of Internet of Things

One bright spot for Chinese firms, however, was the pace of their growth, especially gains at chip design houses that contract out their manufacturing to other firms. China’s market share of global sales by those “fabless” design companies rose to 9% last year, compared with 5% in 2010.  Increased sales among the group helped an overall 26% increase in revenue at China-based semiconductor makers last year, tops in the world.

China’s IC market outperformed the total IC industry growth.  The Chinese market (i.e., consumption) for ICs increased 13% from $88 billion in 2013 to $99 billion in 2014. In comparison, the total IC market increased 9%.  Chinese IC companies increased their sales of ICs by 26% last year, primarily based on the success of the fabless Chinese IC suppliers.

IC industry growth in China in the next 3-5 years will be, most likely, the smartphone and Internet of Things (IoT) will be the biggest two driving forces over the next 3-5 years with the IoT being more of a long term driver and the smartphone having its biggest impact in the relatively near term.

The best opportunities for mainland IC companies during the period and Logic and processor ICs for smartphones and IoT. Chinese companies are not major producers of analog or memory products and are unlikely to enter these segments in any significant way.  Most of these devices will be provided by fabless Chinese IC suppliers.

The companies most likely to loose market share are those currently supplying logic ICs for low- to mid-range smartphones.  One strategy for a non-Chinese company to counter a loss in market share to the Chinese companies might be to form a “partnership” with Chinese IC suppliers, similar to Intel’s $1.5 billion investment in Tsinghua Unigroup — the owner of Spreadtrum and RDA.

source: qz

About Girly Saputri

Girly is a Content Marketing at Eyro Digital Teknologi, Ltd. She is also a copy writer and likes cheeseburger. She writes about iBeacon and its implementation. You can find her on LinkedIn as GirlySaputri.

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