Global Semiconductor Forum 2012
China Market, Global Impact
TY Chiu
Chief Executive Officer
Semiconductor Manufacturing International Corp.
March,9th, 2012
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 China IC Market Growth
 China IC Market Opportunities
 China IC Ecosystem
 China IC Industry Transformation
 Summary
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3
China IC Market Growth
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4
Global GDP Forecast
Sources: International Monetary
Fund (IMF), iSuppli, Gartner,
Team Analysis, Q4’11 ~ 02’12
Global GDP Expectations
Y2006-Y2013F
20.0
15.0
2006
9.2 8.8
7.5
10.0
5.0
3.8 3.9
3.3
1.6 1.9
1.2
2.0
0.9
0.6
7.4 7.3
7.0
2007
6.8 7.1
6.4
3.5 3.3
1.6
3.0
1.5
0.3
2008
1.6
2.8
2.7
0.8
2009
2010
2011
0.0
2012E
-0.5
-0.6
2013F
-5.0
World
US
UK
Germany
European
Union
China
India
Asia
Pacific
South
Korea
Japan
-10.0
▪ Global economic recovery is slow and expected to extend to 2013
▪ China, India and the rest of the Asia Pacific region remains strong in 2012
▪ China may face growth challenge (no more double-digit growth)
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5
Government Support to Boost Economy
Government programs support both domestic supply and demand:
 Boost domestic demand
 China’s economic stimulus program covers: Home Applications, 3G Handsets, Digital
TV , Automotive Electronics and Solar Panels
 Strengthen local supply capability
 7 national strategic industries are well defined
 Semi industry is the foundation of these strategic industries
Alternative
Energy
7 Strategic Emerging Industries Supported
by the Chinese Government
Alternativefuel cars
IC
Industry
Biotech
Energy Saving &
Environmental
Protection
Advanced
Materials
High-end
Equipment
Manufacturing
New Generation
Information
Technology
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China’s IC Industry: Continued Growth
Unit: Billion USD
Source:iSuppli Corporation Global and China AMFT
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7
China is OPEN to Innovative Products
 China market is seeking innovative electronics products
 Chinese are OPEN to innovative products for entertainment; no longer restricted to
household electronics such as refrigerators or TVs
 Worldwide electronic providers are penetrating the China Market with good products
 Local providers are starting to grow through low-cost solutions
 This is a great opportunity for the global electronics companies
 Example: iPhones are BIG in China
‒ The iPhone is an indicator of innovative electronic devices
‒ China iPhone revenue grew from 2% in 2009 to 12% in 2010.
‒ “China could be a major driver of upside to iPhone estimates in
CY12 - with our estimate for WW unit sales of 138.8 million
units still feeling conservative.” (Barclays Capital)
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8
China IC Market Opportunities
--- Fabless & Foundry
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9
Substantial Gap Between China IC Imports & Exports
China Imports – Goods ($B);
ICs Dominate Overall Imports
Source: China Customs
(Semi 2011 Q3)
 Gap between IC imports and exports is large, and getting wider
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China IC Market, Global Business Opportunities
 Domestic IC Market is open to the world
 Total IC consumption continue to grow unabated.
 China strong increasing import confirms an open and competitive
market.
 Local IC companies find good positions to grow
 Domestic IC fabless companies are very energetic
 Revenue CAGR from 2001 to 2010 = 48%
 Focus Areas:
 Provide low-cost solutions for ShanZai (山寨) and worldwide
market
 Provide niche solutions for domestic-specific applications
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China IC Industry Landscape
• China IC consumption accounts for 1/3 of worldwide sales revenue
• IC purchases by local brands > $40B USD in 2011
$B(USD)
Market Shares of Local Brand & Local Design
Source：iSuppli & CBU internal research
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China Fabless Revenue: Rapid Growth
Sources: Gartner, iSuppli, CCID, Bernstein Research, and Team Analysis Q4’11 ~ 02’12
Mainland Chinese fabless industry demonstrates strong growth:
• High demands for electronics in China
• Favorable government policy
• Government standards for electronics
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13
Chinese Fabless Continuing the Momentum
Chinese Fabless Revenue Forecast
Contribution to WW Semi Market
Sources: Gartner, iSuppli, CCID, Bernstein Research, and Team Analysis Q4’11 ~ 02’12
Continuing the Momentum:
 Chinese fabless revenue growth will likely stabilize at ~15%
 By 2015, Chinese fabless companies are expected to contribute >3%
of total semiconductor industry revenue
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14
Key Factors to Win China IC Market
• Capitalizing on domestic business opportunities
– Provide solutions that meet domestic market requirements
– Provide solutions that target domestic specifications
– Add specific features to meet domestic culture
• Offer cost-effective IC solutions to the world
– China is already the factory of the world
– Combine with domestic electronics factories to provide low-cost solutions
• Innovation and productization
– Early insight into global trends and innovative products
– Quick response, offering solutions to world and domestic markets
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TD Baseband --- China Standard TD-SCDMA/TD-LTE
Spreadtrum released the industry‘s first TD-SCDMA dual-card mobile chip
(SC8800G Oct, 2011), which is the world’s first 40nm low-power commercial TDHSPA/TD-SCDMA dual-mode communications chip that can be run on TD-HSPA,
TD-SCDMA, GSM/GPRS/EDGE mode, and supports 2.8Mbps TD-HSDPA and
2.2Mbps TD-HSUPA.
SC8800G can be used for cost-competitive TD feature phone and TD smart phone
applications. Its TD-SCDMA baseband platform, SC8803G, is used in the Samsung
GALAXY Note.
Source: Spreadtrum company website
CYIT’s TD-SCDMA chip uses SMIC’s 65nm process with independent IPs. It
can be used in a variety of applications such as low-end smart phones, LTE
multi-mode data card, and TD single-mode data cards that can be used in
the Interenet of Things.
Source: CYIT company website
Leadcore TD baseband dual-mode solution, DTivy®1760, successfully passed
the technical test. Its TD-LTE and TD-SCDMA function can switch
automatically. This brings TD-LTE solution closer to commercial market.
Source: Leadcore company web site and 集微网
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Event or Business
Segment
Social Security Cards --- China-Specific Market
To offer better government service to its people, China starts to install banking
features in to Social Security cards. This is a new China-specific business
opportunity.
Datang
• The leading IC design and solution provider; provides self-developed SSCs with embedded
banking features
Source: Datang company website
Fudan Microelectronics
• The provider of SSCs with banking features for Tianjin City, based on SMIC’s 0.18um
EEPROM process. The card supports the contactless bank card feature which qualifies for
QPBOC’s e-cash standard
Source: Fudan company website
CEC HED “华大芯”
• The provider of China Residents Insurances Cards, with contactless CPU IC that can be used
nation-wide
Source: Huada company website
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Event or Business
Segment
Baseband --- From Domestic to Worldwide Markets
May 20, 2011, Spreadtrum Communications, China's leading 2G/3G wireless communication chip supplier,
released two new low-cost multimedia mobile phone chips (SC6610 & SC6620). The highly integrated chips
provide an economical cost structure for GSM/GPRS multimedia mobile phones to meet the lower end of
the growing emerging domestic and overseas market demand for handsets.
This provides customers with a variety of choices including dual-card, tri-card and quad-card options
available on a single baseband RF chip.
Source: SMIC Internal Study
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Event or Business
Segment
PAD --- Low-Cost Innovative Solutions for the World
Ingenic’s Novo 7, based on MIPS and Android 4.0, was selected as one of
“The Best Products of CES 2012” in Las Vegas on January 13 2012
Source: Ingenic company website
Allwinner Tech’s xPAD dominates the Chinese consumer electronics market.
xPAD uses a highly integrated ultra-high-definition 55nm SoC chip. With its
low-cost high-definition performance, xPAD won “The Most Promising”
Award in the 6th China IC Industry Promotion Conference held by CSIP.
Source: Allwinner company website
Rockchip’s Multimedia pad
Rockchip’s RK29XX series is based on SMIC’s 55nm process and uses an ARM
Cortex-A8 processor running at up to 1.2GHz. It is also the first in the
industry to support the VP8 video codec (open-sourced by Google’s WebM
platform).
Source: Rockchip company website
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RDA Wins Battles in Bluetooth, P/A, FM, & DVB-S Tuner
High-performance low-power
RF IC chip, Wifi chip, and
Bluetooth chip
SMIC 55nm LL Technology
INNOPOWER IP
■
RDA Microelectronics – a leading radio-frequency and mixed-signal fabless
design company which takes the leading market share position in Bluetooth
(37% ), End Module/Power Amplifiers (34%) and also #1 in FM and DVB-S
Tuner products.
(iSuppli, 2011 Q3)
"We are quite satisfied that SMIC is fully capable of tackling our leading-edge design
challenges. As the dominant provider in the RF/Mixed-Signal market, close collaboration of
our innovative design with Innopower and SMIC accelerates the development and allows us
to provide the most advanced technology for FM radio receiver chip."
-- Vincent Tai, Chief Executive Officer of RDA
Source：2011 Q1 RDA website
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Niche IC Foundry Provider
HHNEC finds its niche position in providing special
solutions for smartcards, power, discrete applications
 Maintained revenue growth while overall financial trend
worsened. It generated ~400M USD revenue, and ~70M net
profit in 2011.
 A good example for IC manufactures that capacity is not
always the king.
 Key records:
– >5 billion accumulated smartcard shipments in the past 10
years
– 1.05 billion SIM cards shipped in 2011; accounts for 23%
of wroldwide market share (4.6B), making HHNEC #2
worldwide
– >70% China market share in 2nd generation ID cards,
Social Security cards, etc.
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Domestic Advanced IC Foundry Provider




# 4 IC foundry in the world
Offers the most advanced technology solutions in
China
Combines technology and IP solutions to provide
numerous application platforms. Helps customers
achieve quicker time-to-market
China revenue grew to 431m USD in 2011, a 33%
increase over 2010
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SMIC Platform Services: Various Applications
Power Management
• PMIC, PMU, Discrete Power
Wireline
Communication
• Flash Controller, USB, Bridge IC, TCON,
Audio, Video
Image & Display
• Handphone CIS
MCU
• Touchpad controller, MCU
Smart Card
• Banking Card, Smart Card
Connectivity
Mobile Computing
Memory
Digital Home
• WiFi, Blue Tooth, FM
• Base Band, Application Processor, Tablet
• NOR Flash
• Set-top Box, TV chips, TV Game ASIC,
Projector
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23
Big IC Player Found Its Strength in China
• Hynix successfully leveraged favorable government policy and
capital market in China for a dramatic turn around
– Hynix China started in 2006, in 2012 its capacity accounts for 39%
of Hynix’s worldwide capacity.
– Hynix China helps the company survived in the DRAM war, and
secured the 2nd place in the global DRAM business
Sources: Gartner, 2011
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Other Top Tier Semi Companies in China
• More top tier IC companies start to leverage China strength
– 4 out of top 10 IC companies have Fabs (or plan to) in China
• Intel, Hynix, & TI are in production
• Samsung is in preparation
2011 Top 10 IC Companies
Ranking
Top 10 IC
Company
Headquarter
Fab in
China
1
Intel
USA
12"
2
Samsung
Korea
12"
3
TI
USA
8"
4
Toshiba
Japan
N/A
5
Renesas
Japan
N/A
6
Qualcom
USA
Fabless
7
ST
Italy, France
N/A
8
Hynix
Korea
12"
9
Micron
USA
N/A
10
Broadcom
USA
Fabless
Sources: iSuppli, Gartner, TRI, Databeans, SMIC, UMC, TSMC, Wiki, IC Insights, Team Analysis, Q4’11 ~
SMIC Confidential
02’12
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China IC Ecosystem
--- More Opportunities
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26
Top Players in China Ecosystem
Material
Fabless
Fab-lite
Hardware
Mask
Manufacturing
IP Provider
EDA Tool
IC
ECOSYSTEM
Design
Service
Foundry
CP Testing
Packaging /
Assembly &
Testing
Bumping
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Semi Industry Growth Benefits The Whole Ecosystem
• Shanghai semiconductor sales revenue grows 17% in 2011
– Fabless and Hardware/Material show strongest growth momentum
2011 Revenue
$B (USD)
2010 Revenue
$B (USD)
Growth
Fabless
2.29
1.74
31.20%
IC Foundry
1.97
2.05
-4.20%
Assembly
4.41
3.85
14.70%
Hardware &
Material
1.01
0.64
59.60%
Total
9.68
8.28
17.00%
Source : CISA
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Material Provider --- KonFoong Materials
KonFoong Materials - leading providers of ultra high purity
sputtering targets founded in 2005.
Products are adopted by international brands such as SMIC,
TSMC, IBM, Toshiba, Hynnix, and NXP. Sales growth rate >100%
each year
KongFoon’s clients
Source：2012 Q1 KFMI Promotion Material
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Chemical Provider --- Anji Microelectronics
Anji Microelectronics – a leading supplier of advanced materials
(CMP slurries, cutting slurries and associated chemical solutions
for solar industry, resistance stripping and cleaning solutions,
etc.)
Anji’s Advantages
•Domestic manufacturing and warehousing
•Local infrastructure supply chain
Anji’s clients
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China IC Industry Transformation
--- Offering Job Opportunities to the World
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31
ShanZai (山寨) Turning Into Brands
K-Touch Communications –
 Founded in 2002, K-Touch started with mock-up phones based on
Windows Mobile
 In 2006, partnered with MediaTek to become top 3 manufacturer in domestic
handset market, the only local China brand in the top 3
 Acquired by Alibaba (2012 Feb)
 Products sold in 22 countries/regions, including Russia, Malaysia, and India
 Winning Strategy:
‒ Offers a unique “Create in China” mobile solution - leveraging mature
supply chain system in China
‒ A wide range of product lines, from low-end to top of the line, with
corresponding prices to meet different customers’ needs
‒ Provides very thorough post-sale service
‒ Strong R&D Team of 700+, partnering with Microsoft, Broadcom and
Qualcomm.
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A ShanZai (山寨) Turned Into a BIG Brand!
G’FIVE Mobile Technology
•Listed as top 10 global handphone manufacturer in 2 years
•Led Indian handphone market with 21% share in 2010; beating Nokia.
More successful stories in India:
•India's mobile handset market witnessed 14.1 % growth in 2011
•Local and Chinese handset makers such as Micromax, G'Five, Karbonn, Spice,
Maxx and Lava have a strong presence in the market and have stayed ahead of
many big players with their "feature-rich,” “localized” products, at much lower
price points
(Source: CyberMedia
Research, 2011)
(Source: ABI Research,
Feb, 2012)
2010 India Mobile Handset
Vendors Ranking
RANKING
HANDSET
VENDOR
% MARKET
SHARE
1
G’FIVE
21%
2
NOKIA
13%
(Source: ABI Research, Feb, 2011)
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Summary
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34
China Market, Global Impact
• China IC business opportunities are open to the world
– China’s IC industry growth is solid and driven by strong
domestic demand and global market
– China fabless & foundry players target specific positions to
win market share
– A healthy IC ecosystem has evolved across the board
– Global enterprises can also leverage favorable policy and
environment for rapid growth
– Transformation of “ShanZhai (山寨)” to emerging brand,
providing value products worldwide, going global and
creating job opportunities around the world
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Thank You
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