Domestic IC Companies Take Center Stage
Local IC suppliers in China have been working on internal solutions that have reduced the cost of electronic products for consumers. They are currently developing chips that are suited to a greater variety of applications, using more sophisticated technology for processing.
Turnkey solutions have helped design firms in China to establish themselves as the primary IC supply chain for white-box consumer electronics factories in the country due to functions-packed releases as well as low prices. The products satisfy the needs not just of the suppliers catering to the local market but also exporters and foreign buyers.
With the success of getting some market share from multinational players, the suppliers are working to improve their ability to create chips for a variety of applications. This includes SIM cards basebands for mobile phones MPPs, portable media players PMPs, as well processors for audio and video.
Certain IC companies have also begun production in mass quantities using the 65nm process. Some of them include Hisilicon ZTE’s Microelectronics Research Institute and Nationz. Analysts believe that in the next few years, IC manufacturers will be able to design chips for netbooks and LED lighting solutions for automotive and medical electronics, as well as industrial computers.
There are more than 400 IC design firms in China. The majority of them are small-sized businesses that employ less than 100 people. Just 30 companies earn more than $30 million per year, and only five of them reach the threshold of $100 million. These are Hisilicon, Telligent, Availink, Spreadtrum, and RDA Microelectronics. However, with the speed at which the market is growing, there is a good chance that many IC design firms will generate 500 million dollars in annual revenue in 2013.
The steps were taken by cell phone IC designers.
Mobile phone IC providers from mainland China such as Spreadtrum, RDA Microelectronics, SG Micro, and GalaxyCore, are primarily involved in baseband chips and radio frequency (RF) that support GSM as well as 3G standards. They also work with operational amplifiers as well as video and LED drivers and power management ICs along with CMOS images sensors. These companies, along with Taiwan’s MTK, are responsible for promoting turnkey solutions within the manufacturing of mobile phones as well as lowering the threshold for technical expertise and production cost.
Today, white-box mobile phones are now mainstream and come with the most popular and standard applications like digital cameras, multimedia playback E-book readers, WAP browsing. The price for an entry-level phone, for instance, has decreased to $28 from $100. Spreadtrum is believed to have been the first phone to enable standby and dual-mode using a single baseband processor that later was made a standard GSM feature offered by China mobile phone manufacturers.
The second-largest smartphone IC supplier on the mainland, the market share of Spreadtrum has increased from 4 percent during Q1 2009 to 15 percent in August and is predicted to grow to 20 percent by the end of the year. White-box makers from Shenzhen claimed that Spreadtrum’s 6600L cost around $1 less than the same model manufactured by MTK. This is a significant saving in the event that the average income per mobile phone sold is $1.50.
The popularity of turnkey solutions for phones IC sector prompted consumer electronic IC providers to come up with the same business model. They include companies that design ICs to work with PMPs, GPS systems, netbooks, and e-book readers.
Turnkey solutions allowed the domestic PMP IC suppliers to gain market share. When audio playback was the central aspect in PMPs, SigmaTel and Philips were the dominant players in IC supply. With the help of turnkey solutions, local IC design firm Actions was able to launch a PMP chip that could support the viewing of e-books and images, as well as playback of audio and video. Although it wasn’t the most effective solution at the moment, the low price and ease of use led to it becoming a preferred alternative over imported ones, the majority of which cost at least two to three times more expensive.
Since the beginning, local design firms such as Fuzhou Rockchip Electronics Co. Ltd have become the principal IC suppliers for PMPs. One of the milestones is supports for AVI, RMVB format, HD resolutions of 720p and 1080p, and a variety of formats.
Fuzhou Rockchip entered the smartphone line in the latter half of 2009 and then released the RK2816 model in August of 2010. The chip was specifically designed to run on the Android platform and comes with 800×480 resolution as well as 720p HD G-Sensor, full-screen touchscreen as well as HD output. It’s billed as a popular IC solution for manufacturers of white-box devices that are modeled after the iPad.
Crayon provides capacitive touchscreen modules for 25 percent less than the one Taiwan-based Wintek offers on the iPad. The module has passed Microsoft’s multitouch test. It supports Windows Mobile, CE, XP and 7 OS, Android, and Linux.
A SaiLun paper screen made by Guangzhou OED could lower the price of an e-book reader between $130 and $75. Around $45 for a device, E Ink screens account for 60-70 percent of the e-book reader’s cost of materials and components. The lower-cost version from Guangzhou OED allows for reading of up to 15,000 pages and video and flash playback. It comes in various colors and features a 20-millisecond refresh rate.