The Chinese have been spending a fortune trying to get self-reliance in semiconductors and have spawned a cluster of chip designers.
Trendforce said that China has nine companies that design and sell chips in the global top 50 from just one in 2009. Clients such as Chinese smartphone manufacturers have also helped compatriot chip designers amass a market share of almost a fifth, according to data analyst TrendForce.
Huawei subsidiary HiSilicon and Spreadtrum Communications are rising in prominence as the government ploughs funds into home-grown technology to reduce cyber-security risk, following revelations in 2013 of US global cyber-snooping programs.
It is harder for US tech firms to do business and Qualcomm is facing delays closing licensing agreements. In contrast, sales at Chinese designers are set to surge this year, some by as much as 40 percent.
Chinese chip designers lag top rivals in terms of technology by four to five years yet have the potential to disrupt the global chip supply chain, industry experts and executives said.
China’s list of chip design hopefuls include HiSilicon, Spreadtrum and RDA Microelectronics which are controlled by state-backed Tsinghua Unigroup. But there is also All Winner Technology, Leadcore, Galaxycore Microelectronics and Goodix Technology.
TSMC has indicated it thinks that the Chinese will become a strong force in a few years particularly in the integrated circuits market.
TSMC co-Chief Executive Officer Mark Liu warned the Chinese that they have to be careful not to just dump a ton of low price chips in the market.
This is what happened when the Chinese tried to develop industries, such as solar panels and liquid crystal displays. In that case the investment led to oversupply and plunging prices.