SHANGHAI, China – Multinational semiconductor companies are no longer able to compete with China’s fabless chips vendors in the consumer electronics IC business, according to Vincent Tai, CEO of RDA Microelectronics Inc. “It’s game over” for them, Tai asserted in a recent interview with EE Times here.
RDA Microelectronics, founded here in 2004 and listed on the Nasdaq exchange since November 2010, is a leading Chinese fabless IC vendor supplying RF and mixed-signal chips for cellular and broadcast communications used by China handset manufacturers.
RDA is a major supplier to the Chinese mobile handset market. Tai, quoting IHS iSuppli estimates, claimed RDA already has the leading market share in power amplifiers, Bluetooth, FM tuners and DVB-S tuners for the domestic white label market.
Still, RDA has a long way to go to compete with the likes of Broadcom in the global semiconductor market. Still, according to Tai, being a leader in the Chinese market is a good place to be.
RDA’s enviable position foreshadows a growing trend here for companies like RDA to dominate global electronics markets, Tai noted. As evidence, he cited the fact that multinationals such as Analog Devices and Texas Instruments backed out of China’s baseband chip business. While technically not Chinese companies, MediaTek and MStar, two Taiwanese giants, grabbed that market by leveraging their Chinese ties.
Indeed, Tai boldly predicts that the days for multinational chip companies are numbered, especially in the Chinese mobile handset and set-top box markets. “It’s because the supply chain in China can’t allow you to have a 50 percent gross margin,” he explained.
When the entire ecosystem of foundries, design houses along with packaging and system OEMs resides here, “You need to be a local to play the game,” said Tai.
The RDA chief described four rules for surviving in the Chinese market:
Rule #1: The “cycle time” for Chinese handset manufacturers is extremely short. While it takes six months (or a year in the case of Nokia) to design a new mobile handset outside China, Chinese cellphone makers are spinning out new models every three months.
Rule #2: Chinese handset vendors provide chip suppliers will little information about market demand. Therefore, chip suppliers need to be “in touch with the market,” said Tai, so they can be ready when market demand spikes. Speed is the key. “You need to be able to live with the ups and downs on the China market,” he said.
I am not sure what to make of your position - to cede power/money and such to a country that "could" develop personal liberty? They are a great country - there are many great countries - Germany is one of my favorites, but look what happened in the 30's and 40's (unfair perhaps, but illlustritive). It is up to the "world" to decide where to put their business and their power. We have to get away from this "great" nation business - yes, the west must share as should the east in how it treats it's people (including the muslim countries).
It was VERY short sighted of the west to give so much economic power to China specifically just to make a dollar - very predictable as the west is now more concerned with quick money, and not sustained growth and manufacturing - something that governments and business groups need to support more.
As you state it is "way" too late, but don't pull any of the "the west had it good" - so what they should abdicate? To live with the Chinese government making more world decisions? The west is NOT perfect - and perhaps not the better. I am sorry, but I can't trust any monocultural country with too much power, especially with a centralized all powerful government and a propensity to dismiss, cover up, or try to obliterate any problems rather then embracing the opportunity to make better decisions and a future for it's poeople (The West does try...) - is the EETimes, or the Huffington Post ;)
Again, many good posts - my only issue with comparison is that China has a 1.3 billion people and a socialist government (in name) with plenty of corruption and absolute control. If there is one rule of business it is that you only pay employees what you have to.... America, Japan, they both ran out of skilled employees and had to compete against each other for them - thus wages increased. I don't believe this will happen as well for the Chinese people for many reasons - they will have modest improvements (they started so low), but not to what we would call a world standard. And the middle class laborer - forget it as we can't even provide that in America and it exists in Europe only with heavy government subsidies. Not sure of the answer, but direct comparisons don't work.
I think it is just a matter of time that the same will happen in China, the same as it happens in Japan: Our youth don't want this anymore. Their youth will profit from the results of their parents in -say- 25 years. So we are going ahead into rough economic times. I don't know what it will bring for our profession, I really have no clue if we are capable to do proper engineering here in Europe. But fortunately we are very creative. So I think that with our creativity and with good innovative engineering we probably will hold on for these 25 years, let us just hope. The baddest thing to do is to be arrogant (in person and also as a company). Watch out for people 'knowing it all well' who are not directly involved in our industry. They certainly will lead us in destruction - while they fill their pockets. I have my own very small company. I am always very careful for my customers and serve them the best I can. That's my 2 cents and all I can do...
I think protectionism would not help us. But we should give not away our knowledge just to make university professors happy to have enough people in class ( happens here in The Netherlands! ). China indeed copies (and steals) a lot of our designs. This has been proven in very many ways. But I think it is a mind setting problem: Reverse engineering brings you back to the past: I do not believe in it. The only thing that we -as engineers- can do is progressive engineering and innovation. Create useful high quality new things. This can only be done inside small companies. No bothering managers, legal, and lots of other annoying the engineer. And as stated before: Regulations are too tight. We see here that the industry regulate themselves to keep others out of their business (= protectionism) I think this is a bad thing.
Things are changing in our society: Nobody here wants to study for 10-12 years to get an underpaid engineering job in comparison with lawyers, management, and others. For electronics engineering university we have a result of approx. 250 people finishing their study each year out of 16 million folks in our little country.... And I can tell you that not even 1/4 goes into engineering... And this 250 means for all diversities in our profession. (part1)
This is my main concern as the "world" economy used to have diverse supply and manufacturing channels which would eventually balance supply over different sources - in today's economy they seem to push manufacturing into fewer places which reduces competition - and the ability to generate competition. Having China with it's protectionist government pulling the strings of a VERY large portion of the world production and supply channels will make it hard for competitors (ie solyndra) to compete as "The Goverment" can push money around to reduce global competitors in a way that not other company/government can. Either other Governments need to compete in like with China or we have to change the game in some other way to even allow for some level of competition.
This is mostly correct, but I don't believe quality engineers are cheap in China any longer. Can someone comments on how much does a hardware/software engineer with 10 years experience get in China these days? These are the types of engineers you need to make the "quality" "innovative" products.
You need a history lesson, dude. While correct that China has played a very important role in Korean history (some good, some bad), there are distinct ethnic and cultural differences. No doubt the Koreans were at times in their history in awe of China, especially early in the Choson Dynasty. Still, there are many distinct cultural differences between Korea and China - language, ethnicity...
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