Full Steam Ahead For China Inc.

Were you in Shanghai last week? If not, you missed the biggest Semicon event in the world. Semicon China broke records this year. With more than 1,000 companies participating, and 570,000 square meters of exhibition space, Semicon China attracted more than 50,000 visitors, making it the largest Semicon event in the world. All the sessions we attended were standing room only.

Key areas of focus this week included IoT, the JCET/STATS ChipPac merger and the China National IC Fund. AMD CEO Lisa Su set the stage with an opening keynote highlighting the exciting possibilities still ahead for the industry. She pointed out the opportunities and challenges facing electronics as we move toward photorealistic, real-time virtual reality. New applications such as mobile VR require the processing power to transmit a million times faster than the speed that we use to transmit today. These applications will require immersive computing. The need for performance, bandwidth and low power is not subsiding.

The cocktail parties and networking breaks were buzzing over the merger of JCET/STATS ChipPac and the new government investment program, which is focusing on developing China’s IC industry. JCET’s chairman and CEO, Xinchao Wang, views the merger with STATS ChipPac as a strategic move to broaden their worldwide market, as well as improve the opportunity to expand R&D to meet advanced and specialized market needs required by the new emerging markets.

The topic that attracted the most attention was the new government program targeting the IC industry. In June of 2014, China’s Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission (NDRC), and the Ministry of Finance and the Department of Science and Technology, released guidelines relating to China government investment funds that will be made available to promote China’s global competitiveness in all segments of the IC supply chain. The National IC Industry Development Fund will make available 120 billion RMB ($19.3 billion) to players in all segments of the IC supply chain.

One area of focus is the buildup of more manufacturing capacity in order to reduce the amount of IC imports required to support China’s growing electronics ecosystem. The foundries SMIC and XMC should both benefit from the goal of making China No. 1 in the target areas of concentration.

Our week has included candid conversations with key company executives on their strategic plans for the future. Meeting performance and cost requirements are necessary, but the path to success includes a variety of investment, mergers and technology options. Reaching company targets includes innovative thinking, proven strategies and vision.

For more information on this topic checkout the Semico IPI Report, March 2015.