I reported on China’s chip design progress last year and figured it made sense to make this an annual occurrence. I was present at the China Integrated Circuit Design Industry Exhibition (ICCAD) once again this year on behalf of our clients. I’ve been attending the show for the best part of a decade now.
China’s struggles
Last year, the number of Chinese semiconductor design companies rose 5% from 3,451 to 3,626; and this year it rose again, to 3901 companies, a 7.6% increase. Overall revenue from these companies also increased, now at approximately $118bn, a 29.8% increase on last year. This means on average a Chinese semiconductor design company is earning $30.3m in revenue, up from $25m last year. This is positive, but the same problem prevails. There are just too many small companies.
Of the 3901 companies, 831 have revenues above RMB 100m ($14.1m). That means that despite the high average, it is still the case that 3,070 companies are struggling to survive, with revenue less than $14.1m. In fact, when we break it down, 2061 companies earn less than $1.4m, and 783 companies earn less than $7m. Only 39 companies have more than 1000 employees, and 3375 have less than 100 employees, or 86.5%, no change from last year. In short, most companies are small, weak, and fragmented.
