Julian Ho, Taipei; Steve Shen, DIGITIMES [Friday 6 November 2015]
China's national semiconductor industry investment
fund has changed the rules of industrial competition, and backed by this
fund China-based companies will definitely ramp up the production of
its semiconductor products, according to Tien Wu, COO of Advanced
Semiconductor Engineering (ASE).
The fast developments
of a number of industries in China, including LCD panels, LED chips and
solar panels, have led to freefall in prices of related products because
China-based enterprises have been constantly ramping up capacity with
"easy money" from government.
Since 1990, the
production value of the global semiconductor industry has expanded by
six fold, and yet the ASP of semiconductor products still remains rather
stable. This means that demand and supply of the industry have been
kept in balance through economies of scale in production and innovative
activities which have helped increase the value-added of products.
The
global semiconductor industry will be able to grow by a CAGR of 5% in
the next 10 years if production scale and innovation are kept in
balance.
The mishaps of China's flat panel, LED and
solar panel industries were due mainly to the fact that the pace of
innovation of these industries has failed to keep up with the pace in
capacity ramps.
Fortunately, China seems to have
adopted a different approach to promoting the development of its
semiconductor industry as we have not yet seen frantic investments in
capacity ramps.
However, since the rules of competition
have been changed, Taiwan-based companies have to think to advance fast
in terms of innovation in order to avoid being caught up.
It
was originally estimated that it will take 10 years for China's
semiconductor industry to catch up with Taiwan's, but under the support
of the national investment fund the time will be shortened.
The
entry-level IC backend service market will be taken over by China-based
companies in the next 10 year. As a result, Taiwan-based IC testing and
packaging firms have to tie up with companies in more advanced
economies to develop products with more value-added.
http://www.digitimes.com/news/a20151103PD210.html
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