SHANGHAI, China -- Motorola Inc. is boosting its long-term investments in China to meet surging local demand for embedded processors. The company hopes its earmarking of $2 billion for a 0.25-micron 8-inch fab in Tianjin, along with its cultivation of a local design force, will raise its prospects in this increasingly competitive geographic market.
Motorola is initially targeting the 8-bit microcontroller market, which has become a key sector of the Chinese IC industry. While consumer demand is far lower here than in the United States, where microcontroller usage averages 60 per household, the potential for increased consumption by millions of Chinese families has made the embedded market compellingly attractive to global chip makers.
"We believe the total market for Chinese MCUs is between $500 million and $1 billion, and my estimate of the annual growth rate is about 30%," said Stephen Wong, vice president and general manager of Motorola's Microcontroller Asian Operation. "The demand for both 32-bit embedded processors and 8-bit microcontrollers is booming."
China is fast becoming a key market for consumer electronics, home appliances, communications equipment and terminals. The automotive and industrial automation sectors are also boosting demand for embedded processors. All have found they must integrate microcontrollers into product designs to add value to their products.
"Besides the high economic growth rate, China's planned entry into the World Trade Organization is another driving force for the MCU market," Wong said. "A lot of customers told me they were eager to upgrade their products with advanced MCUs before facing tougher competition in the domestic and oversea markets."
Internet and wireless applications are further fueling the push for embedded processors. A huge market for Internet Protocol-based appliances, such as MP3 music players, is taking its place alongside the traditional PC market. Microcontrollers are a key component of those appliances, which do not require high data rates for control.
Experts here said they believe many low-end devices based on the Bluetooth wireless specification will initially use 8-bit controllers. And such emerging products as security systems with photo capture and e-mail capabilities will likely be managed by 8-bit MCUs as well, observers said.
Motorola's varied efforts in China have included an alliance with the developers of China's Hopen embedded operating system in the high-end 32-bit processor market. The U.S. company has also introduced an 8-bit controller family locally, with in-system flash replacing one-time programmable models. Some 8-bit products will be produced in China beginning in October.
On the design front, Motorola is sponsoring three microcontroller laboratories, located here, in Beijing and in Shenzhen. Other such facilities are planned in Chengdu (in southern Sichuan province) and in Qingdao (along the eastern coast in Shandong province).
"Engineers often choose platforms they know well, especially those systems they learned in college," said Limin He, a professor at the University of Aeronautics and Astronautics of Beijing. "So foreign companies always regard their university programs as prior investments in China."
Motorola and China Computer Academy have also jointly hosted three design contests since 1994 for Motorola microcontrollers. The latest asked contestants to design products around processors with fast on-chip flash memory and Internet access functions. The contest drew more than 1,500 applications, along with about 300 detailed proposals. The 24 winners included designs for consumer electronics, communications and automation control.
Motorola opened a microcontroller design center in Suzhou, just west of Shanghai, last year. The center is focusing on microcontroller solutions and software for the local wireless, consumer electronics and automotive markets. About 20 local engineers currently work at the Suzhou center.
"We plan to expand the team to more than 80 engineers by the end of this year," said the center's Pern Shaw. "We have finished four 8-bit MCU designs in the first year, and a 32-bit embedded processor is under development."
The 8-bit designs are targeted at consumer electronics and PC peripherals. The 32-bit design will be implemented in cell phones and personal digital assistants. Since most Chinese universities stress ASIC design, the Motorola design center emphasizes training and cooperative development with its other MCU intellectual-property and core research labs. Local OEMs have begun adopting some of the new designs.
"Asian OEMs pursue their system designs in time for spring trade shows," Shaw said. "They will design and produce commodities in the next several months because retailers need to receive them before Christmas."
Meanwhile, Motorola is cooperating with resellers and end users to generate new designs. That has led to creation of a development center formed in cooperation with Wuxi Little Swan Inc. in Wuxi, Jiangsu Province, to make controllers for home appliances. The designs from the Suzhou center will be produced at Motorola's fabrication facility in Austin, Tex., with some outsourcing of production to foundries in Taiwan and South Korea.
Observers here said Motorola has shown it is in China for the long haul, noting that it has spent heavily on design, production, sales and support. That infrastructure will help it compete as other global suppliers move in on the fast-growing controller market, they added.
"Chinese OEMs have found that their systems were often limited by different suppliers' MCUs, so they hope to get rid of overdependence on foreign MCU" makers, said the University of Aeronautics and Astronautics' He, who is also director of the MCU branch of the China Computer Academy. "They want to implement their system expertise in silicon, so chip designers and makers are their new partners."
Progress has also been reported in other embedded market segments. For example, researchers at Peiking University recently announced a 16-bit microcontroller family that they say is likely to be used by the government and the military.