Advertisement
News
EEtimes
News the global electronics community can trust
eetimes.com
power electronics news
The trusted news source for power-conscious design engineers
powerelectronicsnews.com
EPSNews
News for Electronics Purchasing and the Supply Chain
epsnews.com
elektroda
The can't-miss forum engineers and hobbyists
elektroda.pl
eetimes eu
News, technologies, and trends in the electronics industry
eetimes.eu
Products
Electronics Products
Product news that empowers design decisions
electronicproducts.com
Datasheets.com
Design engineer' search engine for electronic components
datasheets.com
eem
The electronic components resource for engineers and purchasers
eem.com
Design
embedded.com
The design site for hardware software, and firmware engineers
embedded.com
Elector Schematics
Where makers and hobbyists share projects
electroschematics.com
edn Network
The design site for electronics engineers and engineering managers
edn.com
electronic tutorials
The learning center for future and novice engineers
electronics-tutorials.ws
TechOnline
The educational resource for the global engineering community
techonline.com
Tools
eeweb.com
Where electronics engineers discover the latest toolsThe design site for hardware software, and firmware engineers
eeweb.com
Part Sim
Circuit simulation made easy
partsim.com
schematics.com
Brings you all the tools to tackle projects big and small - combining real-world components with online collaboration
schematics.com
PCB Web
Hardware design made easy
pcbweb.com
schematics.io
A free online environment where users can create, edit, and share electrical schematics, or convert between popular file formats like Eagle, Altium, and OrCAD.
schematics.io
Product Advisor
Find the IoT board you’ve been searching for using this interactive solution space to help you visualize the product selection process and showcase important trade-off decisions.
transim.com/iot
Transim Engage
Transform your product pages with embeddable schematic, simulation, and 3D content modules while providing interactive user experiences for your customers.
transim.com/Products/Engage
About
AspenCore
A worldwide innovation hub servicing component manufacturers and distributors with unique marketing solutions
aspencore.com
Silicon Expert
SiliconExpert provides engineers with the data and insight they need to remove risk from the supply chain.
siliconexpert.com
Transim
Transim powers many of the tools engineers use every day on manufacturers' websites and can develop solutions for any company.
transim.com

China vs. Qualcomm: Chip’s ‘Nationality’ Still Matters

By 08.15.2014 0

MADISON, Wis. — So, do we all agree that the semiconductor sector is “always a national business”?

I recently got that very comment from Jeremy Wang, Asia-Pacific executive director at the Global Semiconductor Alliance (GSA). We were discussing the emerging trend among leading Chinese fabless chip companies — Spreadtrum Communications, RDA Microelectronics, and Montage Technology — that have left or are leaving Nasdaq to become “privately owned” by China’s state government funds.

Wang, one of the most astute China hands I’ve ever met, does not mince words in his perspective on historical events and current developments in the semiconductor industry. Chinese fabless companies delisting themselves from the US financial market is a “natural trend,” he said. “Historically, there was no suitable Chinese financial market” when the first fabless companies were planning IPOs a decade ago. “Now the government has been emphasizing innovation and technology in which semiconductors play a key role.”

I happen to agree with him.

Partner Content
View All

Look at Japan, Taiwan, Korea, Europe, and even the United States. Every place has had its fair share of government assistance before the birth of local semiconductor companies. These governments have also engaged in fierce trade disputes on behalf of their own industries while exerting every form of coercion, pressure, and political tactics to get their local chip companies up and running.

Alternatives to going “national”?
Taiwan Semiconductor Manufacturing Co., for example, would have never been born without a government commitment to the nouvelle foundry model. Samsung wouldn’t be the semiconductor behemoth it is now without a helping hand from the Korean government. Without help from the ministries in Tokyo, none of Japan’s technology godzillas — including Mitsubishi, Hitachi, Toshiba, and NEC — would have ever created their own chip divisions and stuck to them a little too long.

Neither Wang nor I profess that nationalism (or protectionism, for that matter) is the only way for chip companies to grow locally. But historically, the success of every regional semiconductor industry came on the back of strong government interest and commitment. And we haven’t necessarily found an alternative model, other than going “national.”

Each country or region “has its unique DNA in terms of culture, skill, and competitive advantage,” Wang said. In an ideal world, as promoted by the GSA, chip companies would eventually cross borders and find opportunities to take advantage of the “industry’s supply chain and entire ecosystem.”

However, the hard reality is that we find ourselves still stuck in nationalism. As I write this, we’re seeing a lot of political action in China — sometimes misguided — to protect local chip companies.

Consider China’s recent, fairly hypocritical moves to focus antitrust investigations on a host of foreign companies. Targets include Qualcomm, Microsoft, and a number of automotive manufacturers based in Europe, the United States, and Japan.

Qualcomm vs. China
Qualcomm has been under investigation since November by the National Development and Reform Commission (NDRC) over how the company licenses its patents and prices chipsets.

The latest development, which could complicate Qualcomm’s case, is the firing of an antitrust expert based in China from a government advisory post after state-owned news media reported that he had received “huge rewards” from Qualcomm. The accusation is not directed at Qualcomm.

0 comments
Post Comment
Pi3P1415926   2014-08-15 03:19:54

Qualcomm was under antitrust probe in Europe, Japan and Korea before.

jeffa4444   2014-08-15 06:33:43

Hopefully the British government will grow some balls and do the same as all the countries listed unfortunately its not likely to happen. America protects many industries, so does France, Spain, Italy, China, Korea, Germany, Brazil etc. Find me one industry the UK government does the same with over 54% of all business and 80% of big business is foriegn owned in the UK mainly by America, France & Germany.  

Jim McGregor   2014-08-15 12:19:21

Unfortunately, this nationalism/protectionism is not limited to semiconductors, it extends to all aspects of the electronics industry and other industries. All countries are guilty of similar infractions and no country is immune from the impact. In the end, when government intervenes in the market, everyone suffers.

jeffa4444   2014-08-15 12:31:15

I still stand on what I said Britain does not protect any industry it does give one tax incentive to the creative industries for inward investment. America does defend industries although it talks about free trade, France and China openly look after their own.

junko.yoshida   2014-08-18 10:47:35

I do believe that there is a fine line between nationalism and protectionism. But for an industry like semicondcutors which does require substantial investment in infrastructure (if you are in a foundry business) to start up, traditionally, it hadn't happened withou a government's will and assistance.

Now, how long that government's help should continue is another story, though.

jeffa4444   2014-08-18 11:50:32

In the UK I think we still have one semiconductor foundry at Plessey Semiconductor in Plymouth. They have converted this for GanLed production and it was totally private money as I said the UK government promote British business but DONT support it financially or by protectionism but the world is far from a level playing field as European companies are finding in China. 

asic_pal   2014-08-18 12:57:10

Agree, it's time for Govt to get involved to save Semiconductor Conductor Industry in US!! Traditionally Semiconductor Startups are funded by Venture Capatalists but the recent trend in semiconductor industry is little scary as  VC's dropping (zeroing) their investments in semiconductor startups.

While other countries taking it as an opportunity and funding their Semiconductor Startups, it's not a healthy situation for US Semiconductor companies as those startups eventually become fierce competitors in the long run ( as we can clearly fore see )

 

 

 

Sheetal.Pandey   2014-08-19 00:12:31

Manufactring is often linked to nationalism. And in onw way its true also. The new Indian government is also keen to promote manufacturing locally.

CC VanDorne   2014-08-27 11:00:43

Look at Japan, Taiwan, Korea, Europe, and even the United States. Every place has had its fair share of government assistance before the birth of local semiconductor companies...

Taiwan Semiconductor Manufacturing Co., for example, would have never been born without...Samsung wouldn't be the semiconductor behemoth it is now without...Without help from the ministries in Tokyo, none of Japan's technology godzillas...

@Junko, you are truly an old-school investigative reporter and I dig your work. If only we saw from all our media the same level of curiosity and focus that you have.  But isn't your comparison above actually contrast?  Those companies were started with a push from their respective governments but the goal, it seems, was that after they get off the ground, they became privately controlled, competitive companies.  Either Truly private or publically traded, but not government entities. And its worked out that way.

But these Chinese fabs are going in reverse, no?  They were on the market as publically traded companies getting foreign capital and now they're being sucked up by the state.

Your error, or my missunderstanding aside, this trend is concerning. My question would be what did these companies gain from their short time taking foreign capital that will now be property of the Chinese communist government?  Is it just money, or IP and infastructure involved too?

junko.yoshida   2014-08-27 11:21:20

@C VanDorne, you are absolutely right. Those Chinese companies are going backwards.

However, one thing remains ambiguous in my mind.

Even though those companies are pulled back from the stock market in the U.S., China's state-owned funds seem mighty interested in making quick RMBs by investing more in them, but quickly selling them off (doing IPOs) on the Chinese stock market. Some China hands explained to me that much of those activities we are seeing now are pure financial plays. 

In the past, in China, none of the big state-owned electronics companies truly succeeded. We were beginning to notice the success of Chinese fabless companies only when many of those companies began getting founded by those "sea turtles" (Chinese engineers educated in the US who subsequently went back to China). At that time,  the stock market in China wasn't mature enough. They had to come to Nasdaq to get some funding. So, yes, they did get money and also gained some exposure and great visibiliity by coming to the U.S. as private companies.

I actually have great admirations for many of those Chinese fabless companies who managed to get listed in Nasdaq. They learned to do business in a much more transparent environment -- compared to many local Chinese fabless who have never gone through this process.

But again, what remains unclear to me is what those China's state-owned funds will eventually do to those once publicly traded companies.  

CC VanDorne   2014-08-27 11:40:40

Just a financial play?  If it's only that then it's still intersting in that it seems premature.  But what do I know.  I am writing you from my place of employment, after all...and not from the corner office either.

lilzz   2014-08-31 13:13:05

@Junko, of course nationalism matters, I have been watched closely your posts throughout the years, you have paid alot of attention of what China does on its semiconductor industry. Your ethnicity does play a role in terms scrutinzing China strategic industry closely. It's no surprise China is the number 1 spied on target of Japan throughout the years. It had spent tremendous amount of resources in watching every details of China does in aspects especially defense and strategic industries. 

Now China ready to up its game and I have seen you become really concerned or even paranoid about it. You can use the excuse of protectionism all you want.   And I am not surprise by all these. 

 

 

junko.yoshida   2014-08-31 17:41:34

Thanks for your comment. I am not sure if I am 'paranoid' as you say, but I sense I am not the only one who wants to understand what's going on in China. I do agree with you: China is ready to up its game. Tell us more some of the things you've learned about China's strategic industries.

lilzz   2014-08-31 18:30:00

It's fairly simple, China is tired of exporting  only shoes, clothes, and toys while importing a overhwemling amount of hightech stuffs from advanced countries. 

How about switch role, China will make and export all kinds of advanced stuffs and US and Japan make shoes and clothes for China??  How do you feel about that?

Your comments about Chinese hightech companies retreating back to Chinese state firm is off. Why? because all these years, none of them have risen to western competition due to overhweming lead by western companies. A different way needed to get it done. 

It's Not good for China to keep using the latest leading western tech, instead, they should use Tech they can control and have mastered even if they are abit behind. 

Anyway, China unlike any countries like Japan, Korea which simply do not have the market size to doing this way.  

Already, government already banned window 8 , and will debut its own OS (linux derivative) for desktop and Smart phone. It will promote domestic G4 cellphone chips by Hisilicon, Spreadtrum...etc  And asked bank to switch away from IBM server and Cisco routers.  You will see Chinese made MIPS based processors ramping up to for desktop, supercomputer and low cost platform for IoT.  Soon government will screen for government, state firm pruchased computers and cellphone for ALL-CHina-Made components for those systems, meaning CPU, memories, Chipsets, and harddrives have to made in China.  Not more made-in taiwan or made in korea compoents for those government purchases. That's why you seeing Samsung setup a very advance memory fab in Xian for this reason. 

You can say  whatever China produced in China may not be accepted by western countries. Duh, big deal. just like its COMAC C919 airplane project even not a single one sold to country outside China , it still will do it and sell it to domestic airlines. 

Remember, China will become a $20 Trillion economy, even if none of its hightech products sold to western countries, it's still pretty big for all domestic supplier.  Third and second tiered countries will for sure buy Chinese hightech stuffs.  

ANYWAY, EVEN IF WESTERN TECH ARE SUPERIOR, BUT IF CHINA CANNOT CONTROL IT, IT"S BETTER NOT USE IT. THAT"S BOTTOM LINE. Rather gain the lowered tech and modify it and use it. 

Thta's route China is going. 

The day of multinational companies dominating China is over. 

Not just Qualcomm, but Intel,  Broadcom, Lattice, TriQuint, Altera, Linear, TI they better watch out. Right now, Microsoft, McAfee, Cisco, Google the software and system guys got hit big but later component guys will also get hit.

If they are smart, they better team up with Chinese state firm to form a sharing  JV in China and then they can at least survive abit or else they will be sweep out of door in near future,.

And many of them using taiwan manufacturing and sell them to China market. That's not going to work. No way...  China will crack down on that.

I read about Japanese firms trying to ramp out the G4 stuffs trying to capture China market, well, they have bulleye on their back now China trying to ramp their own stuffs plus the tense political situation between the two countries. 

 

 

 

 

 

 

 

 

junko.yoshida   2014-08-31 20:11:32

Thanks for laying all that out to us. 

However, I don't particularly agree with your following statement.

NYWAY, EVEN IF WESTERN TECH ARE SUPERIOR, BUT IF CHINA CANNOT CONTROL IT, IT"S BETTER NOT USE IT. THAT"S BOTTOM LINE. Rather gain the lowered tech and modify it and use it. 


Regardless where the technology originates from, if the technology is effective, people will have a way to use it.

None of our economies, if we built such rigid walls around us, would have progressed to the state as we enjoy today.

By the way, that also includes China. (i.e. Many great chips designed in China -- including those by Spreadtrum -- are fabricated by TSMC today.)

 

lilzz   2014-09-01 11:48:24

Alot of older technology still good. 

You know the law of "Diminishing Return"

There's isn't a whole lot of difference between current tech and tech of 30 yrs ago. 

Fo example, at the height of cold war, US produced the Sea Wolf Class Submarine, B2, F22. 

30 yrs later now, US have Virginia subs and F35, heck, there's NO clear advantage between weapons 30 yrs ago versus what's current have. In fact F35 in alot of ways inferior to F22 of 30 yrs ago.

So, if China only sticks to self produced MIPS CPU, and only used self produced DDR2 memory and own chipsets for its desktop, server, laptops, it won't MISS a BEAT.

The country still do FINE.

It doesn't need all those leading edge , exotic stuffs at all. It just a way for western companies to maintain its monopoly.

 

A good analogy is "an adopted child will never be as good as your own" because he or she doesn't share your bloodline. It doesn't get anymore fundamental than that. 

There will be 2 distinct trends in China. On one hand there still be company like Lenovo, Xiaomi that used alot of foreign tech so they can still sell to oversea,.or general public. 

On another trend, the government, military,  state firms and education areas, self owned technology will emerged.  They will exclude lenovo and Xiaomi because they are using too much foreign techs in which China have no way of control.

 

lilzz   2014-09-01 12:48:39

China has already taken the best shots from US on Protectionism. Obama admin has raised record amount tariffs against Chinese industrial goods such as steel products, tires, auto parts, solar panels and out right banned huawei and ZTE on US markets. yet company like qualcomm making over 60% revenue from China , $12.5 billion from China.  It doesn't take a genius to see such huge discrepancy. and Not Wonder makes Chinese government mad.  

You don't see China Crying that much publicly about it.

Now China is out to get even. and you see US and EU crying so hard about it. 

Like a boxer, you need to able to dish out as well as taking punches. 

I mean the stuffs China selling right now in US markets do need WTO helps shoes, jackets , toyes etc.  Even without WTO US will not snuff those daily usage stuffs out from China else inflation will run through the roof.

The battle is at hitech and industrial products. 

I mean pretty much majority of China industrial products have already been target of Obama admin.

You don't see China crying about it. It took the punches from US quite well.

Now China gets even with US and I see all kinds of crying , raging,  howling in US media. ..pathetic.. Sheeshhh  Cannot take punches at all. 

 

 

 

 

 

 

junko.yoshida   2014-09-05 01:55:16

@C VanDorne, I got a little more information on the topic you and I have been talking about here.

Please read the latest story I posted here:

Can China Buy Its Way into Global IC Industry?

http://www.eetimes.com/document.asp?doc_id=1323760&

CC VanDorne   2014-09-05 09:47:53

Thanks for the link, Junko, and Happy Friday.  This storyline has inspired me.  I'll call it "The People V.C."?  I think it works - the tag anyway.  If this new-friendly fascism actually works in practice in China...well, that remains to be seen, and will be fun to watch.  Please keep up the good work.

junko.yoshida   2014-09-05 09:51:27

@C VanDorne, "People V.C."? Lol. I like it. 

Yes, happy friday to you too!

CC VanDorne   2014-09-05 09:54:44

Thanks, bu I must correct a typo.  To correctly play off of the PRC's official name it should have read "The People's V.C.".

 

Anyway...

krisi   2014-09-05 11:25:44

Qualcomm making 60% of their revenue from China? Sounds high

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Articles