China aims for semiconductor industrial output of CNY350 billion in 2015
Since the implementation of China's 12th Five Year Plan in 2011, the country's semiconductor industry has shown a steady yearly revenue growth from CNY179.61 billion (US$29 billion) in 2010 to CNY240.8 billion in 2013, representing a compound annual growth rate (CAGR) of 10.2%, thanks to a steep rise in sales of entry-level and mid-range smartphones, in addition to the continued expansion in foundry and assembly house production capacity, according to Digitimes Research.
This growth rate compares favorably with the global semiconductor industry annual growth rate of less than 5% each year from 2011 to 2013, with 2012 even registering a negative growth rate of -2.7%, due to lower-than-expected end market demand and inventory adjustments.
Based on the assumption that 2014 will see better global economic prospects than 2013 and the shipment of mobile devices including entry-level and mid-range smartphones and tablets will be able to maintain a momentum of double-digit percentage growth, Digitimes Research estimates that revenues of the China semiconductor industry are likely to increase to CNY267.37 billion in 2014, an annual growth rate of 11% from 2013 and a compound annual growth rate of 10.5% from 2010, which far surpasses the CAGR of 1.7% of the global semiconductor industry in the same period.
However, the goal of CNY350 billion for the China semiconductor industry in 2015, laid out by China's State Council in the "National Semiconductor Industry Development Guidelines" promulgated on June 24, 2014, may be out of reach.
According to a recent Digitimes Research Special Report, the State Council has responded to this challenge by also publishing guidelines to strengthen government support for China's semiconductor industry, including expanding tax benefits mentioned in the State Council Document 4 (2011) for IC design houses and foundries to testing firms. The central government also plans to set up a national industry investment fund of CNY120 billion. Digitimes Research believes through the investment fund support, China will increase its capabilities for advanced processes on 12-inch wafers. In addition, there will be more China-based semiconductor firms merging and more acquisitions of international firms by China-based firms.
