To turn this trend around, the Chinese government recently published a document entitled "Outline of the State to Promote the Development of the Integrated Circuit Industry," which provides a blueprint for how China hopes to ramp up its integrated circuit (IC) sector in the years ahead. The document also highlights the challenges that China faces in its efforts to jump-start its semiconductor industry, which Chinese officials believe is critical to the country's high-tech development.

"China's IC industry is still very weak, far from supporting economic and social development as well as national information security, national defence, and security-building needs," the report said.

Declaring that semiconductor production is essential to the foundation of the information technology industry's rapid development, the document described the importance of an IC sector as "the measure of a country's comprehensive national industrial competitiveness and an important symbol."

Compiled by China's Ministry of Industry and Information Technology, as well as the National Development and Reform Commission, the Ministry of Science, and the Ministry of Finance, the document also suggests that China is missing opportunities to produce chips for mobile phones, TV sets, and industrial equipment—to name a few areas where the IC sector could reap billions of dollars for the Chinese economy. No country knows this better than China, which is a large consumer of ICs used in high-tech manufacturing.

For 2013, IHS estimates show that Greater China had $150.3 billion in semiconductor consumption, which includes China/Hong Kong at $132.5 billion and Taiwan at $17.8 billion. This is an 11.7 per cent increase over 2012 when consumption stood at $134.5 billion. The total for worldwide consumption is $335.4 billion. Greater China's share of the worldwide semiconductor consumption market is nearly 45 per cent.

While the Chinese government is well aware of the benefits of developing an IC sector, it is equally aware of the barriers to its development. This includes the high cost of domestic financing, a long period before investors realise a return on investment, an unwillingness to invest, and a lack of talent to build the industry.

If the plans outlined for the coming years come to fruition, we can expect to see a vigorous push by the government to establish a climate where investors will be encouraged to fund the industry.

By: DocMemory
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