iSuppli Corp., market research firm predicted that China's semiconductor market growth is expected to continue its acceleration in 2007, meanwhile warning that today's boom in the region could well lead to tomorrow's burst.

Semiconductor shipments in China are set to rise to $51.7 billion in 2007, up 20 percent from $43 billion in 2006, Byron Wu, director and principal analyst of China research for iSuppli said in a recent speech at the World Semiconductor Trade Statistics (WSTS) Spring 2007 committee meeting in Shanghai. This compares to 15 percent revenue growth in 2006.

But according to Wu, while such accelerated growth may seem to be positive, there are some concerns that the Chinese technology industry and the overall economy are entering a stage of "unsustainable hyper-expansion" that could generate a market bubble.

"The major theme for China in 2007 is overheating," Wu said in his speech. "There's concern over whether Chinese electronics OEMs will continue expanding their sales, whether buying power will continue to increase among consumers and whether exports will remain on the rise. At the macro level, there's increasing concern that the overheating economy could bring a disastrous bubble that could derail China's stock and real estate markets."

Although there is a need for industry players to be vigilant about the threat of another market bubble, Wu said that these factors do not represent a major risk for the semiconductor industry, as, despite the currently robust conditions, growth in China has actually decelerated compared to a few years ago. After expanding by 39.8 percent in 2004, China's semiconductor industry has settled into a more sustainable average growth rate ranging from 10 percent to 20 percent. This year will represent the cyclical peak for China's market, with growth expected to cool in the coming years, Wu said.

The communist republic has become an increasingly prominent player in the worldwide tech industry in recent years, as companies have become more open to explore business opportunities in China despite lingering legal worries. Last June, the China Semiconductor Industry Association accepted an invitation to apply for membership in the World Semiconductor Council, a group that had until then included only semiconductor organizations in Europe, Japan, Korea, Taiwan and the United States. Two weeks ago marked the first time that the WSTS committee meeting has been held in China.

By: DocMemory
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