China's Chip Market To Rise 20 Percent In 2007

EL SEGUNDO, CA—Despite uncertainties regarding the technology sector and the overall economy, China's semiconductor market growth is expected to accelerate in 2007, according to Byron Wu, director and principal analyst, China Research, for iSuppli Corp.

Speaking at the World Semiconductor Trade Statistics (WSTS) Spring 2007 Committee Meeting in Shanghai recently, Wu predicted that semiconductor shipments in China would rise to $51.7 billion in 2007, up 20 percent from $43 billion in 2006 (see figure). This compares to 15 percent revenue growth in 2006. While such accredited 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 says. "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."

However, Wu stated that these factors do not represent a major risk for the semiconductor industry, where growth has actually decelerated compared to a few years ago.

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