China faces big DRAM challenges

Taiwan scene - pic Mike MageeWhile the Chinese government is determined to grow its domestic semiconductor business over the next five years, there are some severe obstacles in its path.

According to the Trendforce market research company, DRAM is the most likely entry point for semiconductor fabrication.

But there are some problems ahead. While China has massive financial muscle, a large domestic market and the will to succeed, established memory makers such as Samsung, Hynix and US company Micron own must of the intellectual property.

Trendforce analyst Ding Wenwu said that the likely way for China to play catch up is by making partnership agreements. There are existing semiconductor deals to emulate – such as a cooperative venture between Intel and Spreadtrum.

The other route is through buying companies – for example Silicon Solutions Incorporated was bought for $21 a share earlier this month by investment company Summerview Capital, outflanking Cypress Semiconductor.

An obvious route would be through association with established semiconductor companies based across the Taiwan Straits. Trendforce said that senior Chinese officials have already visited Taiwanese companies but also needs to convince the government on the island that it’s feasible to make partnership agreements without harming domestic interests.