S Korean joint venture to produce advanced chips on mainland

PUBLISHED : Saturday, 26 February, 2011, 12:00am
UPDATED : Saturday, 26 February, 2011, 12:00am

A mainland affiliate of SK Telecom, the largest wireless network operator in South Korea, is entering the mainland Chinese semiconductor market through a new joint venture that will produce advanced chips for smartphones, media tablets and personal computers.

SK China - formed last July by SK Telecom and other subsidiaries of Seoul-based parent SK Group - yesterday entered into partnership with the Korean semiconductor firm MtekVision to establish the venture, called SKMTek, which is forecast to generate up to US$355 million in annual sales by 2016.

SKMTek, located in the Shenzhen High-Tech Industrial Park, will initially focus on the design and production of so-called system-on-a-chip (SoC) devices. The term refers to various components - including specific software applications with digital, analogue, mixed-signal and wireless communications functions - on a single integrated circuit, or chip.

'We aim to make the best use of our deep experience gained in diverse areas in the Korean market - including communications services, media business and platform business - to develop and offer competitive SoC products and mobile solutions in the Chinese market,' Hahm Hee-hyeok, SKMtek's managing director, said.

The chip venture, which is expected to start commercial operations by the end of next month, plans to expand its market coverage by 2013, when it will also supply advanced chips for cars, electronic appliances and so-called smart grids - electricity networks using digital technology.

SK China, which will have a 60 per cent stake in the venture, and MtekVision agreed to invest jointly an initial capitalisation of US$16.9 million.

The mainland accounted for 41 per cent of global semiconductor consumption last year, according to PricewaterhouseCoopers (PwC).

Alison Wong, an assurance partner at the professional services firm in Shanghai, said the mainland's demand for chips is 'driven in part by the country's rapid urbanisation, increasing consumer consumption and green energy initiatives'.

The dragon's share

PwC says the mainland accounted for this percentage of global semiconductor consumption last year: 41%