China's fabless sector should extend beyond its borders and reach out to the 6 billion inhabitants of the developing world, says one CEO.
It is true that Chinese goods (cell phones; telecom infrastructure, etc.) are already making deep inroads in Africa. Chinese products are also being pitched aggressively in Brazil, Southeast Asia and India.
China's outward foreign direct investment
Zhu believes China has a good chance to grab a chunk of this overlooked 6 billion who would love to have a smartphone. Much of what these potential consumers want, after all, is mirrored by the desires of the Chinese consumers.
Zhu vehemently disagreed that China can succeed in the developing world by sacrificing quality. Aiming for the low end of the market isn't sustainable for China, nor will it be tolerated in Africa, Brazil, Southeast Asia or India.
I’ve heard from several Chinese sources that a lot of first-generation smartphones and media tablets flooding the Chinese market didn’t work properly. They were merely cheap knock-offs. In the past year, many vendors have learned their lesson and improved their products. The quality of second-generation tablets and smartphones sold in China has improved.
Addressing the needs of the developing world buys China time to learn, improve and innovate.
Chinese industry sources predict a wave of consolidation over the next few years. A passel of me-too product companies beating up one another on price isn’t just a caricature of today’s China fabless industry. It’s also the reason why some must die.
GigaDevice’s Zhu agreed, saying he there are too many fabless companies backed by easy government money. “These little investments didn’t help them get anywhere.”
Setting aside consolidation of the China fabless industry, we ask: What is the strategy of U.S. chip and system companies for cornering those 6 billion potential consumers? Do they even have a rough outline, beyond paying the usual vaguely colonialist lip service to "BRIC" countries?
For that matter, do they pay attention to them?
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