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[China Special] ST to Pursue Integrated Presence in China
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STMicroelectronics had realized the potential of the China market as early as the 1980s when its products were first distributed through Hong Kong. From this humble start, ST has grown to be a 1,300-people operation in China with activities in microchip design, assembly and test, advanced technical application, sales, marketing and logistics.
ST's design center in Shenzhen is among the most advanced in China today offering a range of design capabilities from linear, mixed signal to advanced digital technologies. The assembly and test plant, a joint venture with Shenzhen Electronics Group, was ranked number one in IC production in 2000 by the China Center for Information Industry Development (CCID) of MII.
The company's sales revenue in China rose steadily over the years growing at a compound annual rate of 43% from 1996 to 2000 compared to the market growth of 22%. Today, ST is ranked number two in the Asia-Pacific market according to recent preliminary data for 2001 given by Gartner Dataquest. In China, ST was ranked number four in the year 2000 (latest available report) with 6.4% market share and would probably gain market share in 2001.
ST's success in China is the result of the company's commitment to the Chinese market. ST realizes the importance of being a true partner willing to go a long way with the industry and aims to have an integrated presence in China. In return, the Chinese industry will respond well to true values in products and services accorded by foreign companies.
Partnerships
Partnerships and cooperation with government units and domestic companies are therefore one of the major approaches to ensure long-term success. Another key factor is to identify areas of importance early and follow through with an aggressive but persistent investment and commitment, including R&D, where appropriate.
ST is working with many partners in various areas, including digital consumer, telecommunication, wireless, smartcard, etc., with an eye on co-developing and bringing know-how to both parties.
Although speculation is rife about whether China will be able to measure up to WTO, opportunities still abound. Take telecommunications for instance. Traditional telephony and broadband for data transmission, where penetration is relatively low in China compared to the rest of the developed and developing world, are potential markets. This is a sector that the government has prioritized for the last couple of decades in all of its Five-Year Plans and is critical for the development of the country.
Wireless (GSM, GPRS, and ultimately 3G) is also high on the Chinese government's list where ultimately home-grown technology and expertise are needed to compete locally and finally in the world market. TD-SCDMA was slated as a local priority to become a viable alternative to other 3G standards.
Given its huge population, smartcard application is another area with tremendous opportunity for development, including ID cards, insurance, transportation, security access and banking.
Digital Consumer Market
Digital information transmission (set-top box in both cable and free-to-air, Internet, etc.) is viewed as critical for future deployment of information, including education and entertainment. This should rapidly increase when government regulation eases. Eventually, this will also form the basis for all sorts of convergent platforms in terms of products and services where the Internet becomes the core for interchanges between services, to be supported by both the wired and wireless networks.
The digital consumer market has been dominated by VCD, but unfortunately this is limited only to the domestic market. DVD now enables the Chinese manufacturers a significant opportunity to compete in the world market, both as OEM and ODM.
Overall, the semiconductor industry is seen as central to acquiring the necessary technical levels for China to be a world player. In this respect, the Chinese government is actively pushing for the development of semiconductor capabilities to compete with the outside world. ST has and will continue to play a part in the development process by mobilizing more resources to China.
Understandably, the Chinese government considers that a commitment to the Chinese market is only complete if the whole product value chain is installed in China. ST has a successful assembly and test manufacturing facility in Shenzhen operational since 1986. The plant has a production area of 22,000 sq m with capacity for 1.5 billion units of finished chips.
by Alan So,
President of Greater China,
STMicroelectronics Asia-Pacific
(April 2002 Issue, Nikkei Electronics Asia)
ST's design center in Shenzhen is among the most advanced in China today offering a range of design capabilities from linear, mixed signal to advanced digital technologies. The assembly and test plant, a joint venture with Shenzhen Electronics Group, was ranked number one in IC production in 2000 by the China Center for Information Industry Development (CCID) of MII.
The company's sales revenue in China rose steadily over the years growing at a compound annual rate of 43% from 1996 to 2000 compared to the market growth of 22%. Today, ST is ranked number two in the Asia-Pacific market according to recent preliminary data for 2001 given by Gartner Dataquest. In China, ST was ranked number four in the year 2000 (latest available report) with 6.4% market share and would probably gain market share in 2001.
ST's success in China is the result of the company's commitment to the Chinese market. ST realizes the importance of being a true partner willing to go a long way with the industry and aims to have an integrated presence in China. In return, the Chinese industry will respond well to true values in products and services accorded by foreign companies.
Partnerships
Partnerships and cooperation with government units and domestic companies are therefore one of the major approaches to ensure long-term success. Another key factor is to identify areas of importance early and follow through with an aggressive but persistent investment and commitment, including R&D, where appropriate.
ST is working with many partners in various areas, including digital consumer, telecommunication, wireless, smartcard, etc., with an eye on co-developing and bringing know-how to both parties.
Although speculation is rife about whether China will be able to measure up to WTO, opportunities still abound. Take telecommunications for instance. Traditional telephony and broadband for data transmission, where penetration is relatively low in China compared to the rest of the developed and developing world, are potential markets. This is a sector that the government has prioritized for the last couple of decades in all of its Five-Year Plans and is critical for the development of the country.
Wireless (GSM, GPRS, and ultimately 3G) is also high on the Chinese government's list where ultimately home-grown technology and expertise are needed to compete locally and finally in the world market. TD-SCDMA was slated as a local priority to become a viable alternative to other 3G standards.
Given its huge population, smartcard application is another area with tremendous opportunity for development, including ID cards, insurance, transportation, security access and banking.
Digital Consumer Market
Digital information transmission (set-top box in both cable and free-to-air, Internet, etc.) is viewed as critical for future deployment of information, including education and entertainment. This should rapidly increase when government regulation eases. Eventually, this will also form the basis for all sorts of convergent platforms in terms of products and services where the Internet becomes the core for interchanges between services, to be supported by both the wired and wireless networks.
The digital consumer market has been dominated by VCD, but unfortunately this is limited only to the domestic market. DVD now enables the Chinese manufacturers a significant opportunity to compete in the world market, both as OEM and ODM.
Overall, the semiconductor industry is seen as central to acquiring the necessary technical levels for China to be a world player. In this respect, the Chinese government is actively pushing for the development of semiconductor capabilities to compete with the outside world. ST has and will continue to play a part in the development process by mobilizing more resources to China.
Understandably, the Chinese government considers that a commitment to the Chinese market is only complete if the whole product value chain is installed in China. ST has a successful assembly and test manufacturing facility in Shenzhen operational since 1986. The plant has a production area of 22,000 sq m with capacity for 1.5 billion units of finished chips.
by Alan So,
President of Greater China,
STMicroelectronics Asia-Pacific
(April 2002 Issue, Nikkei Electronics Asia)
