China's semiconductor demand seen remaining strong
Posted: 8:13 PM | Feb. 10, 2005
Manolo Serapio
XFN-Asia
THE DEMAND for semiconductors in China has grown significantly in the last five years, as original equipment manufacturers and other consumers of semiconductors have shifted production there, and is likely to continue to outpace output in the coming years, according to a study by PricewaterhouseCoopers.
PricewaterhouseCoopers said domestic semiconductor production hasn't kept pace, resulting in a 20 billion dollar gap in 2003, up from 5.7 billion dollars in 1999.
In its report entitled "China's Impact on the Semiconductor Industry", PricewaterhouseCoopers said the gap between domestic integrated circuit consumption and production will continue to accelerate in the next several years, strengthening the Chinese government's resolve to increase domestic production.
The report, prepared by PwC's Global Technology Centre, shows that the most significant impact Chinese production capability will bring to the industry is cost-related.
Cost efficiency has long been the focus of many chip suppliers, particularly those focused on Asia-Pacific, but PwC said circumstances in China would create another dimension to this competition because the Chinese industry's foundry model makes lower cost structures possible.
Additionally, many Chinese companies are supported by state-owned financial institutions and are able to continue their operations in spite of losses for many years, it said.
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