SHENZHEN, China – Will China ever create an enterprise comparable in size, creativity and impact to Texas Instruments?

So far, it hasn't come close. For now, there’s not much chance it will.

With surprising candor, Chinese executives here acknowledge last week (Sept. 7) that they face a long road ahead before China can give birth to a chip company of TI’s caliber. An industry panel including Chinese fabless CEOs, executives working for EDA vendors and a foundry along with a professor from Tsinghua University, debated the matter during the China Fabless CEO Forum & Awards event, organized by EE Times-China, a sister publication of EE Times.


China is rapidly transitioning from its role as a manufacturing center to a design center for the electronics industry. The latest annual China Fabless Survey by EE Times-China revealed that volume production of digital ICs at 45 nm or below by mainland China local fabless companies has grown by 33.3 percent over the previous year.

The panel discussion lacked the usual chest-thumping by the Chinese executives. Instead, there was soul searching and a list of seven reasons why China is still better at tea than TI.

1. Many Chinese fabless companies are too overwhelmed to survive.
//大多数中国的Fablesss公司还在迫于生计，尚未解决温饱问题。

Jeff Ju, president and CEO of Dioo Microcircuits Co. (Shanghai), said, “Local guys are under tremendous pressure to survive.” Local Chinese fabless with no IP of their own are starting their own R&D from scratch. They can’t, at this point, imagine a way to catch up with a behemoth like TI. Sometimes, because they’re consumed by day-to-day operation, “local Chinese fabless aren’t even familiar with the technologies and IPs that foundries can offer them,” Ju added.

2. Lacking multiple product lines.
//缺乏多产品线。

Few Chinese fabless companies have multiple product lines. Many, too busy chasing what they perceive to be the hottest market of the moment, are one-trick ponies.  In contrast, TI has revenue coming from multiple sources ranging from analog to embedded (microcontrollers), wireless and others.

3. They don’t know how to get bigger.
//不知道如何做大。

Many international companies grow “big to bigger by mergers and acquisitions,” but this isn’t so for Chinese fabless companies, said Shaojun Wei, professor at Tsinghua University (Beijing). The first-generation CEOs of small local fabless companies are “too emotionally attached” to the companies they founded, and they find it very difficult to merge with other companies, he explained. “That’s a big problem here.”
They suck at forecasting

4. They’re not open minded.
//思想不够开放。

“Fundamental to mergers is to agree with other companies,” said Luo Yi, CEO of X’ian Semipower Electronic Technology Co. (X’ian). Chinese executives, generally speaking, don’t communicate with other companies with an open mind about  the possibility of a mutually beneficial deal. “Except for Huawei, I don’t see many Chinese fabless companies that can pull that off.”

5. They’re not identifying the right segments.
//国内的fabless公司和TI完全还不是一个量级。

“To beat TI, China has a long way to go,” said Zhang Jin fang, CEO of Chipone (Shenzhen). The most important thing for us is to find the right segments of the market that we should be in, he added.  “To identify that strategic market is hard.” So far, what usually happens is that a whole bunch of China fabless firms spot the same opportunity and go after the same or similar market segments en masse. Then, they all try to beat each other on price.

6. They suck at forecasting.
//中国的Fabless公司不擅长预测市场。

Chinese fabless companies are terrible at forecasting the market demand for their chips. A Chinese market environment that tends to favor the reselling of chips in Hong Kong, for example, creates a broad impression that there’s a chip shortage. The inevitable result is overproduction and an oversupply of chips, thus fueling price competition and a buyer’s market.

7. The "spirit" to match TI is willing, but the substance is weak.
//赶超TI只是一种精神上的愿望，离实际差地太远。

China fabless companies aspire toward TI’s example, but “TI has something special Chinese companies can’t touch,” said X’ian Semipower’s CEO Luo. “TI has the big bucks it takes to invest in the future.” It’s hard for most Chinese companies caught up in today’s market forecast to think five to 10 years into the future. Even if they were tempted to invest for the long-term, they simply don’t have the capital to spare. They either need a sure thing — which is impossible when you’re envisioning scenarios that have yet to develop — or a whole lot more money than they have right now.

Huawei could be China’s TI someday, Luo predicted. But he’s not betting on it.

-- Additional reporting by Miya Kong