© wrangler dreamstime.com Analysis | May 20, 2015
Beijing, Shanghai, Hefei, Wuhan all in for a ride?
On March 12, a Chinese consortium led by Summitview Capital announced its acquisition of Integrated Silicon Solution (ISSI), a fabless IC company listed on the NASDAQ, for 640 million USD.
And with this acquisition, the Chinese government has officially declared its entry into the semiconductor manufacturing sector. The takeover of American-based ISSI is only the first step in the establishment of China’s domestic DRAM industry. Based on the findings of DRAMeXchange, a division of TrendForce, China consumed around 10.2 billion USD of DRAM in 2014, representing around 20% of the worldwide turnover. This huge internal demand is sufficient to support the development of a locally based DRAM industry. The newest reporting indicates that there are six local governments currently vying for central government’s approval to bring DRAM fabs to their areas. Only one candidate will be chosen and once the fabs are built, China will start to put together a vertically integrated supply chain. The consolidated companies in the upstream sector will be able to develop its own IPs and form strong links to the downstream sector. In addition to the clustering effect that will prevent DRAM fabs from leaving the country, the scale of China’s economy and its equally vast market will ensure sustained growth for the entire industry. Beijing, Shanghai, Hefei, Wuhan, and two other cities compete to be the center of China’s semiconductor industry Presently, there are six cities competing for the DRAM fabs, and prominent ones are Shanghai, Beijing, Hefei, and Wuhan. Beijing is an important market for China’s IC design, and it is where many returning graduates from foreign universities have landed. The city moreover has significant advantage in experts and expertise since it is the home of Tsinghua University, Institute of Microelectronics of Chinese Academy of Sciences (IMECAS), and Beijing Semiconductor Manufacturing International Corporation (SMIC). Thus, Beijing is considered the main trading hub of China’s consumer electronics. Shanghai, on the other hand, has the SMIC headquarter, and SMIC as a major semiconductor foundry is at the top of the IC industry chain in China. As for Hefei, it has in recent years gathered a group of talents in IC design with the help from the former CEO of Elpida Memory, Yukio Sakamoto. On the whole, all candidate cities have the potentials becoming the home of DRAM fabs. Their chances of success may be finally determined by the political influences and connections that local officials have with the central government. ----- More information can be found at Trendforce.
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