Legend Silicon, once a red-hot China-U.S. startup focused on DTV chips, closed its U.S. operation in late 2011. What went wrong and what did we learn?
customer-base is truly global--including those in the U.S., Europe,
Japan and China, pricing becomes one of the hardest issues with which
your China-U.S. company must wrestle.
In theory, you can’t have
two separate prices for the same chip, and yet, Chinese OEMs/ODMs are
clearly in need of a different pricing model than what’s applied in the
West. While it’s customary for a U.S. chip company to reduce the price
for chips purchased in volume, the price often goes up in China if you
buy in volume. Meanwhile, Chinese OEMs/ODMs almost expect to get their
hands on a new chip at a very low cost--initially.
mediate that gap remains a huge challenge-- turning into a tug of war
between a U.S. team who wants to decide price according to a set of
familiar rules and a China team that sees a whole different demand from
its local customers.
4. Knowing if your chip is actually getting designed in
isn’t particularly specific to Chinese OEMs (I've heard similar stories
about Korean giants like Samsung), but, generally speaking, you’re never
sure if your chip (which you thought was a design win) is actually
designed into a system by your customers. More often than not, you’re
working for OEMs/ODMs along with a number of other competing teams from
your rival chip companies. Despite a lot of handholding with your
potential customer, you’re never sure your chip will eventually get
designed into their systems. This practice--maybe necessary from an OEM
viewpoint--could suck up a lot of your resources with no results after
5. Expect no feedback from your China customers/colleagues
of the most frustrating things for anyone working for a U.S.-China
company is that you rarely get any feedback from your China colleagues
or customers. Often, Chinese customers just don’t know what they want.
Perhaps more striking is that your customers or colleagues often share a
fear of creating a new market. They’d rather go after a market that’s
already proven or that’s getting visibly hot.
So, while they
might quietly decide to hang their hat on novelty features to the next
product cycle, they neglect to communicate their decisions or share
their desires with you. You end up with an enigma designed into a