436 Fabless Companies In China

Shanghai-based foundry SMIC has identified 463 fabless chip firms in China and says the demand for more is enormous.

“We have identified 463 fabless semiconductor companies in mainland China, 120 of them are really promising,” Richard Chang, Founder, CEO and president of SMIC, told the IEE/FSA International Semiconductor Executive Forum in London in September 2004.

“We’ve built five fabs there but can still supply only five per cent of China’s total demand,” he said.

Chang said the demand for fabs in China presented a huge opportunity for the foundry industry and the semiconductor equipment industry. The opportunity for sales of semiconductor production equipment is dramatic: “There’s a 200 per cent per year increase in the market,” he said. “In China the chip industry is seen as very interesting, very exciting,” said Chang. “Every province wants a wafer fab; every regional governor wants a fab and will give grants to anyone wanting to build a fab in their region.”

SMIC puts the 463 fabless firms into five categories: state-owned design houses; state-owned turned private firms; Taiwan design houses which have set up in China; international firms which have set up in China; and returnees and overseas Chinese coming back to start firms.

The first four categories received their initial funding either from the Chinese government or the Taiwanese government. The fifth category received money from venture capitalists and local government.

The attitude of Taiwan towards China has radically altered. “Many of us worked in Taiwan before. When we came here in 2000, the Taiwanese said we’d never make it,” said Chang, “but in 2002, they all realised they’d need to come to mainland China.