IC Design Houses in China, 2005

According to statistics, currently there are 500-odd IC design houses in China. Employment in IC design houses increased from 3000 in 2000 to 20,000 by the end of 2004. IC design sales revenue reached 5.76 billion RMB in 2003, accounting for 12.6% of the total product value of IC industry, and in 2004 IC design sales revenue increased to 11 billion RMB accounting for 20% of the total product value of IC industry. It is estimated that by 2008 IC design revenues will exceed 80 billion RMB.

China semi-conductor market has enjoyed a continuous 5-year rapid growth, with growth rate exceeding that of the U.S. and Japan, and China has become one the fastest growing semi-conductor market. In the future 3 years, the amount of IC design houses will exceed 800 in China. Great changes will be seen in the design capabilities, product varieties, and business operating capabilities in China's IC design sector. Some IC design houses with business strength will lead China's IC design sector towards mature development road.

In terms of entire business layout, China IC design sector will form a relatively concentrated industry layout centering on Beijing-Tianjin Delta, Yangtze River Delta, Zhujiang River Delta and Western Area Delta. IC design sector in these areas is relatively mature and normalized in relations with the industry chain, with revenues accounting for 80% of the total IC design sector in China. IC design houses with over 100 million annual revenues have occurred. As a whole, the scale of IC design sector in China has fundamentally come into shape. China IC design sector has achieved the scale that took western countries over a decade to achieve.

On IC design technology, China has achieved considerable progress. At present, the majority of mass production design lines have reached 0.18m, 0.25m and 0.35m technology, some even reached 0.13m. China's scientific research is approaching the 90-nanometer technology.

Nevertheless, IC design sector in China still faces serious challenges. For deficiencies in many aspects, China still relies on IC products import. In 2004, imported IC products in China Mainland accounted for over 80% of the total IC products.

China's deficiencies in IC design are manifested in the following:

Manufacturing techniques in general are lagging behind the U.S., South Korea, Japan and China Taiwan;

SOC and IP core design capability is far from satisfying the market demand, most products are low-end levels with low profit rate;

The entire market scale of China's IC design sector is relatively small compared to developed regions in the world;
China's IC design sector is in short of qualified personnel, including technical staff, management and marketing personnel;

There are few high-end products, even fewer products for high-level system manufacturers;
IC design houses are generally medium- and small-sized, few large firms with great influence to the industry.

However, the Chinese government has always been supporting strongly the IC design industry and released a series of preferential measures to encourage the development of IC design houses, including Document No.18. Document No. 51, tax refund, and discount government loan, setting up specialized industrial base and supporting IC firms. Overseas venture investment firms and far-sighted persons are also actively participating China's IC design sector. By way of participating in shares, or directly establishing their own firms, they entered China IC industry and have made great achievements.