Incentives expected to drive development

China's integrated circuit (IC) industry is expected to enter the next round of rapid development, driven by the investment and financing incentives announced by the government early last year. As a result, the industry will see active investment, financing and acquisitions, according to a new report by CCID Consulting.

The research firm says the industry on the mainland has witnessed intensive growth in the Yangtze River Delta, the Bohai Rim Area and the Pearl River Delta. In the Yangtze River Delta, where domestic packaging and testing enterprises are most intensive, sales revenue reached 97.843 billion yuan (HK$120 billion) last year, accounting for 67.9 per cent of the country's total.

On the investment side, from 2010 to 2011, 12 equity financing deals, involving China's IC companies, were concluded, totalling 3.287 billion yuan, with an average financing of 365 million yuan per deal, substantially above the average level of 252 million yuan from 2001 to 2009.

Among China's IC companies that launched initial public offerings (IPO) from 2010 to 2011, were five chip-design firms, one chip-manufacturing company and two enterprises supporting chip design.

With rapid growth in the domestic market, the central government has given full play to its policy guidance function to foster and encourage IC companies to become bigger and stronger, according to the report.

This has resulted in the emergence of a group of competitive companies. The National Technologies, listed on the Shenzhen Growth Enterprise Market (GEM), raised 2.380 billion yuan through its IPO, reflecting the expectations of the capital market on China's IC design firms.