Chinese fabless semiconductors set for market boom

China’s fabless semiconductor market is on the road for very high growth, with analyst estimates for 2015 sitting at $10.7 billion in revenue.

That’d be up from $5.2 billion in 2010, itself enjoying 23.6 percent growth from the previous year at $4.2 billion. This year, IHS iSuppli expects revenue to reach $5.74 billion. The industry in China has been strenghtened by the high demand for semiconductors in mobile devices, with shipments of mobile handsets designed on Chinese turf expanded almost 60 percent last year.

China’s fabless market will have to focus on the domestic market to keep growth healthy. They will let local companies take advantage of the better deals as the consumer electronics industry grows with it.

Huge demand for consumer electronics in China means there will be a wide market to make the most of. “China’s fabless semiconductor suppliers must focus on consumer electronics because the major characteristics of the market, including technology, price and quality, play to the strengths of Chinese chip designers,” says IHS iSuppli.

Suppliers will also be looking to convergence of features as other mobile devices gain momentum – all the while, they will have to keep in mind wider industry trends, changes and business models.

Another challenge for China will be in adapting to Western and other overseas territories. “Companies must accommodate and adjust to the differing cultures of overseas customers,” says IHS iSuppli. “They must learn more about end-content sectors that drive the growth of technology markets.”

There will be hurdles in penetrating the logic semiconductor markets, as well as securing enough capacity at the fabs. Both foundry and assembly capacity was a problem in H1 2010, a tough challenge considering the relatively small size of China’s domestic fabless suppliers.

The industry will continue to take advantage of policy support from government. Beijing has offered help in the way of tax rates, investment and capital investments.