The 2014 update assesses the current status of the semiconductor industry in China and how it has changed since our previous update. As with our previous reports on this issue, we conducted a second-order analysis for the 2014 update. To accomplish this, first we reconciled data from different, incomplete and often contradictory reports from various sources. These sources included industry associations and third-party research firms located in Asia and the West. Then we analyzed the reconciled data with an eye towards filling in gaps and revealing information that was not apparent in the original source material. We also interviewed industry executives to obtain current views from various parts of the value chain.
This year we found reasonable consistency between various sources about the direction and relative magnitude of the changes in China’s semiconductor market and industry. However, there was still a noticeable variation between sources about absolute size of the market.
For our top level reporting of China’s semiconductor consumption market and production industry, we have continued to utilize the values reported by CCID Consulting. They provide the most comprehensive detail about China’s market and industry available and their reports are the principal source of information for Chinese policymakers.
For some of our detail analysis we have utilized alternate sources that provide information not available elsewhere and have, wherever possible, tried to base each such analysis on a homogeneous data source. For example, for our analysis of China compared with worldwide semiconductor market by application and by device; and of semiconductor consumption versus purchases China versus worldwide by region we have continued to utilize the values reported by Gartner (GDQ) as they provide database information for each of those markets that is reconciled on a worldwide basis. As a consequence, the value of some metrics may vary slightly between different figures and tables. We acknowledge these differences and trust that they will not divert our readers’ attention from the value and significance of the findings of the report.
Our intent with this method remained to construct a more comprehensive, meaningful, and yet quantitatively based, picture of the industry than is otherwise available. Using this method, we surfaced additional findings and considered the ramifications of those findings for multinational semiconductor industry companies.
The growth of China’s semiconductor market—which consists primarily of electronics manufacturing services (EMS) companies, original design manufacturers (ODMs) and original equipment manufacturers (OEMs) that consume chips in China—continues to be a major catalyst for changes in the industry. For this reason, we assessed the status of the market in depth and considered its effects on semiconductor production: wafer fabs; packaging, assembly, and test facilities; and integrated design manufacturers (IDMs) of the industry. We also reviewed the status of the fabless and design companies in China.
A couple of further points we should note on the data sources, the metrics we use or developed had to be sufficiently comprehensive and consistent to be useful for the type of report we wanted to publish. For that reason, we elected to use the World Semiconductor Trade Statistics (WSTS) values for the worldwide semiconductor market wherever possible although several other market research firms have reported greater values. The WSTS values are the only official values recognized by the various industry associations, including the China Semiconductor Industry Association (CSIA), that are members of the World Semiconductor Council. We have elected to convert the Renminbi (RMB) currency values from various Chinese data sources to US dollar values at the year-end foreign exchange rate for the year reported while recognizing that many of the semiconductor transactions in China are originally priced in dollars or other foreign currencies and converted to RMB on a contemporaneous basis for local reporting purposes.