Great story, Junko!
Well told, and I loved the background and regional history part of the story.
The past two decades have moved the Chinese fabless companies into mainstream markets for volume in Mobile. And the story of this company's renewal shows the importance of location and restructuring, building on a good foundation.
Zhuhai really does seem to be located historically close enough to Hong Kong that they captured engineers from Korea, and Taiwan to supplement the local talent. The Riviera of China? That idea will stick. All they seem to need is cellular connectivity talent and perhaps IP. Good luck to them in 2013.
"For a chip company to survive in the consumer market, Zhou observed, “You need to be number one. Only the top player makes a lot of money. The number two can make some money, but the number three will find a hard time” surviving."
It should be noted that this is true in pretty much *any* industry. when a new market is created, lots of folks jump in. Gradually, consolidation occurs, and you are left with a couple of dominant players and perhaps some smaller niche firms serving areas the big boys don't target.
The only difference with consumer electronics is the speed at which it occurs. What may take decades in other industries can happen in years in consumer electronics, and anyone in the consumer electronics space must be aware of that and plan accordingly.
Well put. I hear more and more companies are instituting a discipline: if you aren't number one or two in the market, get out.
I wonder how long it takes for the tablet apps processor maker to get settled.
Thanks for your kind words.
I wouldn't have been able to find out the 'Riviera of China' and the actual environment Actions in, unless I visited there. I was truly surprised when I saw this huge HQ there!
China seems to take over everything except semiconductor business. Top Chinese Official and business leaders already realized importance of semiconductor business 10 years ago and invest lots of Money into it. But end result seems less satisfying. What is difference between Semiconductor Business and other business? Here are a few of my opinions:
1. Low cost could not offset low performance. Unless other industry, 5 years, sometimes 2 years old, semiconductor technology is already antique. People might still pay you 80% price toy built using 10 years old technology. 5 years old semiconductor product? I'm not sure people will use it even free;
2. Semiconductor business require long term strategic investment. With easy and fast money from real estate and others, no many Companies in China are willing to invest on it;
3. In general, Chinese are extremely good followers but not technology leaders. Unfortunately, this is leaders take all business;
I want to find a job from allwinner at the of last year.
I visited the allwinner technology HQs in zhuhai last year.
It take about one hour from guangzhou south station to zhuhai by CRH and bus.
There is no message until now,I should be not pass the interveiw.
I don't know there is some relationship between actions and allwinner technology.
Chinese's fabless company are struggling very hard to make a life in consumer electronics.
Thanks for the story between actions and allwinner technology.
It let's me know some information behind chinese semiconductor industry.
Actions is a famous company in china, you can read a lot information in some technology websites in china.
Actually government investment is in a completely different sector, namely Fab and precision analog and pure processors. Which I always viewed as supporting of the military industrial complex as these things are blocked by sanctions imposed on China after 1989 and worry about backdoors in foreign made products.
Fabless houses like Action, Allwinner, Spreadtrum, Rockchip etc, are really dark horses with little government support. The only benefits they get is tax breaks that was applied across the technology sector and infrastructure that was built to support this sector.
If you have time, there is the long story of the Chinese semiconductor industry, from first IC in 1964 to 2008.