SHENZHEN, China – Will China ever create an enterprise comparable in size, creativity and impact to Texas Instruments?
So far, it hasn't come close. For now, there’s not much chance it will.
With surprising candor, Chinese executives here acknowledge last week (Sept. 7) that they face a long road ahead before China can give birth to a chip company of TI’s caliber. An industry panel including Chinese fabless CEOs, executives working for EDA vendors and a foundry along with a professor from Tsinghua University, debated the matter during the China Fabless CEO Forum & Awards event, organized by EE Times-China, a sister publication of EE Times.
China is rapidly transitioning from its role as a manufacturing center to a design center for the electronics industry. The latest annual China Fabless Survey by EE Times-China revealed that volume production of digital ICs at 45 nm or below by mainland China local fabless companies has grown by 33.3 percent over the previous year.
The panel discussion lacked the usual chest-thumping by the Chinese executives. Instead, there was soul searching and a list of seven reasons why China is still better at tea than TI.
1. Many Chinese fabless companies are too overwhelmed to survive.
Jeff Ju, president and CEO of Dioo Microcircuits Co. (Shanghai), said, “Local guys are under tremendous pressure to survive.” Local Chinese fabless with no IP of their own are starting their own R&D from scratch. They can’t, at this point, imagine a way to catch up with a behemoth like TI. Sometimes, because they’re consumed by day-to-day operation, “local Chinese fabless aren’t even familiar with the technologies and IPs that foundries can offer them,” Ju added.2. Lacking multiple product lines.
Few Chinese fabless companies have multiple product lines. Many, too busy chasing what they perceive to be the hottest market of the moment, are one-trick ponies. In contrast, TI has revenue coming from multiple sources ranging from analog to embedded (microcontrollers), wireless and others.3. They don’t know how to get bigger.
Many international companies grow “big to bigger by mergers and acquisitions,” but this isn’t so for Chinese fabless companies, said Shaojun Wei, professor at Tsinghua University (Beijing). The first-generation CEOs of small local fabless companies are “too emotionally attached” to the companies they founded, and they find it very difficult to merge with other companies, he explained. “That’s a big problem here.”