Report on China's IC industry 2009

DUBLIN, IRELAND: Research and Markets has announced the addition of the "Research Report of Chinese Integrated Circuit Industry, 2009" report to its offering.

In 2008, China totally imported 135.538 billion units of the IC and the import amounts reached $129.26 nillion.

In recent years, the growth speed of Chinese integrated circuit industry has exceeded the growth speed of Chinese electronic information manufacturing industry and the global integrated circuit industry. However, there was a big difference in 2008, the growth speed of which was slower than the growth speed of the electronic information manufacturing industry and slightly faster than the growth speed of the global integrated circuit industry.

Facing the strikes from the international financial crisis, Chinese integrated circuit enterprises all tightened their capital flows and took different measures to reduce and stop the production and suspended the projects in process, leading to the slow-down of the yield increases in the integrated circuit industry. During the former eleven months of 2008, the yields of the IC were 39.43 billion units, up by 4.8 percent YoY and the growth speed down by 19 percent compared with 2007.

The Chinese IC industry is strongly characterized as export-oriented. However, the international financial crisis and the recession of the global economy make the global integrated circuit industry in slow growth speed suffer from heavy hits as well as the reduction in the orders from abroad and the shrank of the demands in the international market.

From the aspect of Chinese domestic market, the international competitiveness of Chinese integrated circuit products and foundry is greatly damaged because of the up-valuation of Chinese currency in 2008 and the increases of the costs for the raw materials and labor force.

Meanwhile, the new important application areas of the integrated circuit in domestic market is are hard to start and the newly developed chips are poorly applied in the market, resulting in the weak demand growth in the domestic and overseas market. In 2008, the sales revenues of the integrated circuit industry were only increased by 2.86 percent, 10 percentage points less over the previous year.

Due to the slowdown of demands for the IC, the costs of Chinese integrated circuit industry were operated high in the most time of 2008. In the latter half of 2008, the enterprises all cut down the prices in droves to promote their products, leading to the sharp reduction in the general profits of the IC industry.

In 2008, the profits of the IC industry totaled 3.841 billion Yuan, the negative growth for the first time and the negative growth rate reaching 43.54 percent.

In 2008, memory was still occupying the largest market share in Chinese IC industry, but the reduction in the prices of the NAND Flash and DRAM cut down the market shares of the memory.

With the influences of the fast growth in the personal computers, the proportion of the CPU and Micro peripheral was rising, but the ASSP and ASIC showed the slow growth because of the sharp decline in the yield growth rate in teleco products, as well as the decline in the proportion. Besides, the logic devices, analog devices, MCU and the CPU products kept stable.

In the past years, the fast growth of the computer, mobile phone, consumption electronic, automobile electronic industries supported the fast development of Chinese IC industry. However, from the third quarter of 2008, the economic depression caused unfavorable influences on the downstream industry as well as the reduction in the sales of the mobile phones, MP3 and MP4.

Since the latter half of 2008, the major business revenues of Chinese electronic information manufacturing industry was cut down month by month, the growth speed in October was down by 18.4 percentage points compared with that in the same period of 2007. From January to October 2008, the growth speed of the mobile phones, microcomputers and pocket computers was dropped by 18, 19.5 and 11.3 percentage points YoY, respectively, compared with the same period of 2007.

In 2008, China exported 48.48 billion units of the IC and the exports amounted to $24.32 billion, up by 19.1 percent and 3.3 percent, respectively, and the growth speed of the import volumes exceeding the export amounts by 15.8 percentage points, which means that Chinese IC enterprises take the price reduction measures so as to expand the exports and strengthen the competitiveness.

Similar to the variation trends of the imports, it is predicted that the exports of the integrated circuit will keep growth at slow speed in 2009 and the growth speed will go up after in 2010; meanwhile, the growth speed of the exports will be faster than the growth speed of the imports; the trade deficit in the Chinese IC industry will be narrowed down.

The IC industry is obviously characterized as scaled economy. The larger the enterprises scale, the less the unit production costs and the more helpful to strengthen the competitiveness. The scales of the international integrated circuit giants are expanding continuously.

However, Chinese IC enterprises are all in low yield capacity and small in the scale. Therefore, when numerous domestic manufacturers strive to enhance the technical level, they also formulate the yield capacity expansion plans, standardize the newly built production lines so as to enhance the yield capacity and expand the production scale.