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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (695)	9/9/2003 4:03:28 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Potential problem to stall China's chip industry Posted : 10 Sep 2003 The overwhelming increase of production lines being set up in China may pose as a potential problem for the region's IC industry in the future. A semiconductor production line normally has a 4-5 year cycle in which it will either make profit or not and as a result, it will either to be upgraded or cease operations. However, with too much focus given to production lines, a balance has to be made between design and manufacturing. The central and local governments should not put all its investments in manufacturing. In my opinion, the Chinese government should take 10 percent of the capital they normally invest in production lines and put it into the IC design. Does this pattern apply to manufacturing equipment or does it apply to packaging and testing equipment? The answer is no, because those sectors are all about immediate return of investments. Once a production line finishes its life cycle, these once expensive equipments will be worthless. On the other hand, IC design is the most profitable sector having a life cycle of 15-20 years, as opposed to the 4-5 years of a production line. I think China's semiconductor industry should learn from Israel and India models (where they put more emphasis on developing design industry), rather than just learn from Taiwan, South Korea, and Japan models. In fact, South Korea and Japan have learned some painful lessons in building too many DRAM production lines. We should learn from their experiences as well. - Hua Shen President BLX IC Design Co. Ltd eetasia.com