Demand Boosts IC Imports in First Half Year

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Last updated at: (Beijing Time) Monday, July 29, 2002

Demand Boosts IC Imports in First Half Year

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China was still highly dependent on imports to meet its demand for integrated circuits (IC) in the first half of this year, although the situation should change in three years, according to a report by CCID Consulting, an information-technology market researcher with the Ministry of Information Industry.

Lu Shan, a senior analyst with CCID Consulting, said: "In spite of the resumption in production by Chinese IC makers, their supply was still far from sufficient to supply the market." Lu is also a senior analyst with CCID Data, an industrial statistics collection subsidiary under the China Centre for Information Industry Development Group.

CCID Consulting's report indicates that the demand for integrated circuits in China in the first six months of the year was 13.6 billion chips - up 20 per cent year-on-year - worth 54.5 billion yuan (US$6.6 billion), a 15 per cent.

During the period, Chinese manufacturers produced only 2.9 billion chips - a year-on-year increase of 3.9 per cent - worth 6.1 billion yuan (US$737 million), a year-on-year rise of 31.2 per cent.

The rest of the demand had to be satisfied by imported products, according to the report.

However, Lu said he believed that, with China's ever-increasing efforts to develop semiconductor manufacturing, the dependence on foreign products will ease in the coming years.

Sales of Chinese products are expected to reach 12.5 billion yuan (US$1.5 billion) this year, 41 per cent higher than last year, while production is predicted to rise a further 40 per cent or so to 17.5 billion yuan (US$2.1 billion) next year.

The year 2004 will be a critical year for the industry as many semiconductor manufacturers will have large-scale operations by the end of 2003 and the production value is expected to jump by 50 per cent to 26.2 billion yuan (US$3.2 billion).

Three integrated-circuit production bases have taken shape in the Yangtze River Delta, Pearl River Delta and the North China Microelectronics Base in Beijing, which together contribute more than 90 per cent of the total production of integrated circuits in China.

Chinese telecom operators said that they would invest 200 billion yuan (US$24 billion) in infrastructure this year but they delayed investment amid uncertainty over the break-up of the fixed-line telecommunication giant China Telecom. But Lu said that, with China Telecom being split up in May, most of the 200 billion yuan should be invested by the end of this year. This should boost the demand for telecom networks and computer equipment and in turn drive the integrated-circuit market, added Lu.

Meanwhile, the production of television sets, video compact disks, and stereos rose by more than 20 per cent in the first half of the year. Their continuous growth in the second half will also bring more opportunities to the integrated-circuit industry.

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