“While semiconductors have traditionally been used in computers and computer peripherals, communication, consumer electronics and industrial automation sectors, they are now being rapidly adopted in the automotive application segment as well,” says Frost & Sullivan Research Analyst Lawrence Li. “With increasing overseas investment and growing domestic original equipment manufacturers (OEMs), China has become the largest electronic products manufacturing base in the world, which is likely to boost its semiconductor market.”
Due to low labor and operation costs, improving education quality, positive governmental policies of foreign direct investment (FDI) and large demand of electronics products, a growing number of foreign electronic products manufacturers are establishing manufacturing in China. The shift caused rapid growth in Chinese semiconductor consumption.
The Chinese electronic products market is rapidly changing, with high liquidity of market participants. Moreover, as semiconductor consumers are largely OEMs, their demand rapidly changes along with that of their clients. Hence, decentralization and rapid variation of clients’ demand are serious problems that semiconductor suppliers must face.
“Lots of electronic product manufacturers are seeking integrated solutions in order to reduce the R&D cycle,” notes Li. “However, a large number of semiconductor suppliers lack sufficient and timely information of clients’ demand.”
Semiconductor suppliers need to identify key clients and catch their specific requirements. For semiconductor suppliers that initially entered the Chinese markets, the suitable strategy is to seek clients whose operations are stable. Economic growth in developing countries in Asia, Africa, and South America creates a large demand for basic electronic products such as televisions, washing machines, refrigerators and air conditioners. Rapid industrialization processes in these continents, also huge imports of industrial equipment from China, resulting in market growth.
