April 05, 2004
China - The Land of Opportunity
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Jack Horgan - Contributing Editor

by Jack Horgan - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by EDACafe.com. If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

When most people think of China they think in terms of enormous numbers and size. To get a handle on this consider the table shown below based upon data taken from the World Factbook, a publication of the US Central Intelligence Agency. Most of the data is from 2002 or possibly earlier. The figures for the European Union-15 are taken from different sources.

GDP dollar estimates for all countries are derived from purchasing power parity (PPP) calculations rather than from conversions at official currency exchange rates. The PPP method involves the use of standardized international dollar price weights, which are applied to the quantities of final goods and services produced in a given economy.

Industry analyst Joseph Abelson of iSuppli forecasts that China's production of electronic equipment will rise to $186 billion in 2004, up 11.2 percent from $167 billion in 2003 and production will increase to $270 billion by 2007. Semiconductor market researcher Databeans Inc predicts that the demand for integrated circuits in China will increase by 35% in 2004 to reach $31 billion. In 2009 China's IC consumption would amount to 25 percent of worldwide IC revenue, or $69 billion. China's own chip production while growing very fast amounted to only $1.2 billion in 2003 according to IC Insights. By 2005, China's chip industry is projected to reach $4.18 billion, or only 2.5 percent of
the total IC market.

Trade Between US and China

About 98% of Chinese imports to the United States were manufactured commodities. Some of the fastest growing imports included information and communications technology equipment (an increase of $9.5 billion in 2003), electronics ($107 million), and aerospace products ($25 million). On the import side China is already the largest mobile phone market, the second largest PC market and the third largest and fastest growing semiconductor market. Semiconductors are the second largest US export to China and China's number one import. According to SEMI China spent $1.1 billion dollars on semiconductor capital equipment in 2003 out of $22 billion worldwide expenditures.

China and EDA Vendors

In December 2001 Cadence Design Systems, Inc. announced it was investing $50 million in China to enhance sales, support and services. The expansion included moving to a direct sales business model in China and investing heavily in infrastructure. Cadence established four offices in China-in Beijing, Shanghai, Chengdu and Shenzhen-has and a new wholly owned subsidiary named Beijing Cadence Electronic Technology Company Ltd. The number of technical support, sales, and marketing employees in China was doubled to about 80.

In May 2002 Cadence announced the opening of the Cadence High-speed Technology Centre in Shanghai to serve a growing customer base in Asia-Pacific with training, education programs, and methodology and consultancy services. In the initial stage, the Technology Centre will serve three markets: wireless communication, wired communication, and computing applications. The scope of service will expand to advanced packaging design and digital consumer applications over the next two years.

In October 2003 Cadence and Beijing Zhongguancun Software Education Investment Co Ltd, a consortium of Beijing-based investment companies and the Beijing government, marked the opening of the US$30 million Zhongguancun Cadence Institute of Software Technology (ZCIST) which will train 1,000 students a year.

In November 2003
Cadence and China's Ministry of Education Signed an MOU to develop China's first national IC design training program. The MOU sets the framework for the China National IC Design Talent Incubation Project. The program will initially focus on nine of China's top universities.

"We are extremely proud that the Chinese government has chosen Cadence to help China build a strong foundation as it becomes a global leader in IC design," said Ray Bingham, Cadence CEO. "We are also particularly honored that the government has chosen Cadence as its sole partner to provide EDA technology and training. At Cadence, we share the same vision as the Ministry of Education-to nurture IC design talent in China- which will ultimately help grow our presence and leadership position in China."

Synopsys opened its first office in China in 1995 and has since set up offices in Beijing, Shanghai, Hong Kong, and Shenzhen. In 2003, Synopsys relocated its Beijing office to a significantly larger location closer to the Chinese Academy of Sciences (CAS) and renowned universities. Over the past five years, the average annual growth rate of Synopsys' revenue in China was approximately 70 percent. Synopsys has formed a number of strategic partnerships in the China market, including founding the joint laboratory for advanced SoC design with the Chinese Academy of Sciences and supporting the construction of China state IC design incubators.

In March 2003 Synopsys, Inc. announced an agreement with the High Technology Research and Development Center (HTRDC) of the Chinese Ministry of Science and Technology (MOST) to donate IC design tools to the center. The agreement also includes the purchase of additional Synopsys tools by MOST to be used to support the construction of IC design incubators in seven regions where the Chinese government is encouraging the development of semiconductor industry.

On March 23, 2004
Synopsys announced the opening of an expanded Shanghai office, which now includes the R&D Center and houses more than 200 sales, R&D, and technical support employees.

"China's semiconductor industry continues to expand, making the China market increasingly important to Synopsys' strategic planning for both the Asia-Pacific region and the global market. As an important part of our China strategy and a testimony to our commitment to the local market, we have expanded Synopsys' Shanghai facility to address the growing opportunity," said Dr. Chi-Foon Chan President and COO of Synopsys.

In phone conversation Dr. Paul Lo, VP of R&D emphasized the importance of long term relationship with ministries, universities and customers. He pointed out the value of having been in China since 1995 with stable local management. He estimated the EDA market in China to be around $60 million with double digit growth.

On March 9, 2004
Mentor Graphics announced the signing of a memorandum of understanding (MOU) with the Ministry of Education (MOE) of the People's Republic of China to help the country boost its integrated circuit (IC) design engineering talent pool and overall industry growth. Under the MOU, Mentor Graphics will provide market-leading electronic design automation (EDA) products, training, and support to China's nine top universities for use as core academic education for professors and IC design engineering students. Mentor Graphics has been working with China's top universities
and government research centers since 1989. Currently, there are more than 40 universities in the country using Mentor Graphics tools in daily curricula or in research projects.

Mentor commented to me that “We are working with the foundries on joint development of China's infrastructure for IC design, believing that the way to help China grow an IC industry is to introduce and develop methodologies specifically achievable in China. To that end, Mentor has formed a partnership with Peking University and its Microprocessor Research and Development Center, recognized as China's premier IC design development and training center, to provide training tools” And when asked about unique challenges in China Mentor responded “There are challenges. The addressable market is still small, relatively speaking. This is still "seeding time". But we see
tremendous long term
potential here, and we are committed to solving China's current and future design engineering needs.”

In February Magma Design Automation Inc. and the EDA center of the Chinese Academy of Sciences (CAS) announced the signing of a joint agreement to establish the Nanotechnology Integrated Circuit Design Lab. Under this agreement the lab will develop and provide advanced IC design solutions for nanometer technologies based on Magma's integrated RTL-to-GDSII flow. These solutions will be used in CAS' education programs, research projects and commercial applications, which aim to increase the availability of advanced IC design capabilities in China.

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-- Jack Horgan, EDACafe.com Contributing Editor.

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