A report issued last week by market researcher iSuppli found there are more than 550 fabless semiconductor companies in China, but at least 100 will disappear within two years.
iSuppli's China research analyst Vincent Gu wrote, "China's fabless IC industry is polarized with about 50 companies achieving success and the remainder struggling to survive."
This analysis parallels similar conclusions I reached working on this week's cover story, "China chip industry: The Bomb, or just a lot of firecrackers?"(see page 16) When I started my research, we had two simple questions in mind: Will China find a way to build its own semiconductor industry? If so, who will become China's Intel?
I've long been fascinated with the birth of national chip industries since I started my EE Times career as a Tokyo correspondent. Japan had strong government backing that helped boost its semiconductor industry, along with a strong consumer electronics sector. Tokyo's financial support and protectionist policies eventually provoked a U.S.-Japan trade war.
South Korea followed a similar set of industrial policies, including special emphasis on government support, mass production and emulating its foreign competitors. This combination resulted in vertically-integrated giants like Samsung Electronics.
In searching for China's Intel, my first instinct was to look no further than Chinese engineers who spent time here, then returned home. After all, the birth of Taiwan's chip industry would not have worked without talented returnees like Morris Chang, who developed a daring business model called the "foundry." The success of foundries like Taiwan Semiconductor Manufacturing Co. (TSMC) made Taiwan not only a hub for manufacturing chips but also a center for the development of next-generation process technologies.
Taiwanese politicians are often credited with triggering the boom after they helped acquire semiconductor process technology from RCA in 1975. But TSMC's Chang has said: "That didn't mean that Taiwan entered the semiconductor industry," adding, "All it meant, this license of RCA ... was that Taiwan got the then-RCA's current technology, which was probably a generation behind the leading technology in the U.S. then. Now, after Taiwan got it ... a group of people were sent [to RCA] by Industrial Technology Research Institute and were there for several months ... they brought it back to Taiwan, and they continued to work on it in the laboratory."