上网时间: 2012年07月10日? 作者:Junko Yoshida? 我来评论 【字号: ? ?小】

关键字:无晶圆厂? 并购?

How long for China to sort out fabless strategy?

Junko Yoshida

BEIJING – With reportedly 450-plus fabless chip companies in China, it’s fair to ask how many more years can they survive in this business and, more important, what they must do now to grow into a significant force in the global market.

(Editor's note: How Chinese fabless companies have gotten to where they are today is examined in the previous article entitled "Is China's fabless model sustainable?")

In a series of interviews recently conducted in China by EE Times, Chinese executives estimated another two to 10 years before these fabless upstarts either become irrelevant or go out of business—assuming that they keep doing what they’re doing right now.

In essence, while this window of opportunity differs from guess to guess, everyone seems to agree that China’s current fabless model isn’t sustainable for the long haul. Chinese companies can’t keep growing simply by relying on today’s cost advantage, and working even harder without sleep. However, the hard truth is that the cost advantage in China has been driving many companies to double or the number of triple engineers they hire. In turn, this trend instills fear – warranted or unwarranted – among engineers whose jobs are still in the United States.

As Datong Chen, managing director of Beijing’s WestSummit Capital Management, pointed out, if a company has 100 engineers in China, it can design a product at a sixth or an eighth the cost of the United

States, and in one-third the time.

Wayne Dai, company president and CEO at VeriSilicon, echoes this point.

When asked “why China,” Dai simply said: “The United State is too expensive. Taiwan is good but doesn’t have enough of the engineers [we want], and India isn’t ready.” As far as the cost of doing business is concerned, if the U.S. is one, Taiwan is about one-third, and China comes out to be one-fifth on average, Dai said. Asked about the quality of engineers, Dai said that young Chinese engineers may be green, but given the best design flows and tools, their energy compensates for their inexperience. “We tape out one chip per week at VeriSilicon,” he added. While the company has multiple offices throughout the world, VeriSilicon has a total of 380 people working in China – 250 based in Shanghai.

But it was VeriSilicon’s Dai who sounded the alarm that Chinese fabless companies “will go out of business within the next two years” without a unique business model. VeriSilicon, similar to eSilicon and OpenSilicon, is a fast-growing “IC design foundry” which offers its customers silicon solutions and SoC turnkey services. VeriSilicon, in essence, is not in the business of making their own chips. Rather, it’s in the service business – designing chips for clients, leveraging VeriSilicon’s own IP’s and those from other sources.

How long for China to sort out fabless strategy?

Setting aside the business-model issue, the reality is that the cost of engineers has also been rising in China.

Some report that high-end salaries for Chinese engineering managers – such as a VP of engineering based in Beijing – might have already peaked in 2007 – 2008. But the price of design engineers is still going up. Hence, companies looking to keep their gross margin low are going westward in China in search of cheaper design engineers.

The biggest trap Allen Wu, president of ARM China sees in China’s fabless model today is that there are just too many local companies who compete purely on cost with similar products. That isn’t sustainable. And it’s why Jian-Yue Pan, corporate vice president, Asia Pacific region at Synopysis, is convinced that the survival of fabless China hinges on companies’ power to innovate. “You need to move up the innovation ladder.”

Pan said, “If you want to play in the global market, you need global talents and global supply chain.”

How fast can they learn?

Pan, however, isn’t suggesting that Chinese fabless companies need to invent everything from scratch. Chinese management shouldn’t shy away from actively hiring engineering talent from Japan and Europe, he explained. “Look at how Samsung learned semiconductor expertise from Japanese engineers.” Pan is referring to the somewhat infamous practice – maybe a couple of decades ago – when Korean companies invited Japanese engineers to Korea over weekends; Koreans ask a few questions, Japanese engineers answer, they play golf together, and the Japanese engineers go home — leaving their trade secrets at the “19th hole.”

Of course, this poses an even bigger challenge Chinese fabless companies face: a lack of experienced management skills. WestSummit’s Chen said, “Yes, a lot of Chinese fabless companies today are run by so-called ‘returnees.’ But many of them have little marketing expertise and practically no management experience.” Chen said that the question is: “How fast can they learn?” Chen himself returned to China after getting his higher education in the United States and worked in Silicon Valley; he co-founded Omnivision in 1995, and he was also Spreadtrum’s CTO.

Synopsys’ Pan has similar views. Lack of management capabilities is a big issue, he noted. “To run a $1 billion company, you need a different skill set from the one you used in running a $100 million company.” Take the example of a fabless company, say, founded by three members of the same family. “You may be able to grow that business with no process and no system in place – simply by working very hard, to a 20-people company or even a 100-people company,” he said. But that won’t work with 2,000 people. Pan said, “Chinese executives are good learners. But the question is how fast can they learn? It could take years.”

ARM’s Wu sees that this lack of executive experience can sometimes manifest itself in misdefinition of a market. The inability to clearly define a particular segment of the market to go after with new products could cost the business dearly, or result in a blown opportunity.

M&A waves

However, some of the success stories emerging from the current generation of China fabless companies have a common thread: an ability to pull off mergers and acquisitions.

One good example is Spreadtrum’s late 2007 acquisition of Quorum Systems, a San Diego-based fabless semiconductor company that specializes in the design of highly integrated CMOS radio frequency transceivers. Last year, Spreadtrum also acquired 48.4% of MobilePeak Holdings Ltd., a fabless chip company that designs UMTS/HSPA+ modem chipsets from bases in San Diego, California and Shanghai, China.

As Spreadtrum’s CEO Leo Li proudly put it in a recent interview with EE Times, Spreadtrum wants to be known as a company that offers “U.S. technology with a China attitude.” Li chuckled, “You certainly don’t want to be known as someone to offer ‘Chinese technology with a U.S. attitude.”

Kidding aside, the M&A waves are spreading fast. Earlier this year, RDA Microelectronics in Shanghai (a fabless semiconductor company that designs, develops and markets Radio Frequency and mixed-signal semiconductors for cellular, connectivity and broadcast applications) signed an IP license and development agreement with Trident Microsystems. RDA will pay US$16 million in cash to secure a non-exclusive, worldwide, non-transferrable license to develop, manufacture and sell derivative versions of the Trident SX5 Digital TV SoC platform for a period of 10 years.

Vincent Tai, RDA’s CEO, in a recent interview with EE Times, said the company’s entry in to the DTV SoC market isn’t planned until later. Its IP acquisition was more a defensive move, he explained. But he remained confident: “Even if we are a latecomer to the IPTV market, I know I have a huge advantage. Being a local, we know the local market.”

There’s no denying the rise of not only engineering costs but also the cost of infrastructure in China. Asked how long China’s fabless companies can sustain their business, Synopsys’ Pan, with a little hesitation, first said, “Five years.” But then he immediately corrected himself, “Perhaps another 10 years.”

It's China's speed, stupid!

His optimism comes not from China’s cost-competitiveness, but from speed. He has faith in China’s ability to respond to the market quickly. With all the key component suppliers and the manufacturing base on hand in China (not to mention OEM customers in China), a vast, locally available eco-system lets Chinese fabless companies do business much more effectively. No time lag, no lengthy conference calls and no delayed decision making. It also allows them to expand from simply rolling out me-too products to offering value-added systems or even developing software.

Another source of optimism for fabless China comes from the recent success of MStar and MediaTek – two Taiwanese giants who took the global semiconductor market by storm for mobiles and digital TVs. The so-called “M brothers” drew a blueprint for success that many Chinese fabless companies are trying to emulate. MStar and MediaTek have figured out the significant importance in providing their customers with turnkey software and hardware solutions. “The two companies kept the cost structure relatively low and yet totally globalized theiroperations, by using global supply chains,” observed Pan.

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