China still relies heavily on the import of core techniques and technologies, with 80% of the integrated circuit (IC) chips used in the country being sourced from abroad

September 29, 2013 Leave a comment

China relies heavily on IC chip imports

Staff Reporter

2013-09-29

China still relies heavily on the import of core techniques and technologies, with 80% of the integrated circuit (IC) chips used in the country being sourced from abroad, the Shanghai-based First Financial Daily reports. Gu Wenjun, a senior analyst at market-research firm HIS iSuppli, said China’s imports of IC chips amounted to US$192 billion last year, far more than the US$120 billion spent on oil imports. He added that the country has an acute shortage of high-end chips and its domestic enterprises still cannot develop them due to their weak research and development capabilities, limited capital investment, and lack of production experience.Figures show that China is the world’s largest producer of several electronic products, producing for example 1.18 billion mobile phones and 130 million televisions per year, the paper said. Despite this, China’s mobile phone chip market remains dominated by US chip maker Qualcomm and Taiwan’s MediaTek, which have become the main suppliers of chips used in high-end smartphones and mid- and low-end smartphones, respectively.

In the global IC design market last year, Qualcomm registered sales of around US$13 billion, while MediaTek’s sales reached US$3.4 billion. Meanwhile, China’s leading microchip manufacturer HiSilicon posted sales worth 7.4 billion yuan (US$1.2 billion), accounting for only about 9.2% of Qualcomm’s sales.

Qualcomm owns a wealth of patented technology and is the only mobile chip manufacturer that supports the Apple, Google, and Microsoft software platforms, while MediaTek gained its fame as a leading manufacturer of copycat mobile phones.

Chinese manufacturers entered the mobile phone chip market as early as the 1990s but failed to gain traction in the marketplace. Gu said that domestic chip makers are lagging behind their foreign counterparts mainly because they do not have access to an industry chain, and they vary in commercial strength. In addition, the production techniques and skills of local chip producers are less advanced than those of international manufacturers. Domestic producers also do not have the benefit of a huge capital base on par with foreign producers, said Gu.

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