chip2.jpgChina's chip industry is the world's fastest growing but it is still slanted towards relatively low value-added operations like production, packaging and testing, and the country has yet to be taken seriously in semiconductor design.

That's our reading of the latest research report on China's integrated circuit industry from CCID consulting, the HK-based consultancy.

CCID's figures shows that in the first half of 2007, China's IC output totalled 19.7bn pieces, up 15% over the year-earlier same period. Sales revenue during the first six months of 2007 totalled 60.7bn yuan, a rise of 33% year-on-year, but less than the phenomenal 48% growth achieved in the first half of 2006.

Broken down by sector, the sales revenues in the chip making industry reached 18.4bn yuan during the six months, up 34% year-on-year. In the packaging and testing industry, sales revenues amounted to 32.8bn yuan, up by 36% year-on- year.

But sales for China's nascent IC design sector only rose a more modest 23% to 9.5bn yuan. A year earlier, the growth was running at 50%. CCID blames the decelerating growth rate on a ” a sluggish MP3 and video camera market”. China's chip designers have made most inroads in these relatively low-tech product areas.

China, nevertheless, has the world's fastest-growing chip industry and 8% of the world's IC revenues are now generated in China. In China's latest Five Year Plan, 8% was set as a target for China's chip industry to achieve by 2010 so the barrier has been broken three years early.

More in this CCID press release.

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