IC industry's small-to-medium firms regaining confidence

Streams of visitors were discussing new technologies in earnest and SME exhibitors were full of confidence about the future of China's IC industry. At the 14th International IC-China Conference & Exhibition (IIC-China) being held now in Beijing, people are feeling the "warmth" of the industry's recovery.

2008 has been a bleak year for China's IC industry. Battered by the global financial crisis, sales across the country totaled only 59.73 billion Yuan, representing a year-on-year growth of 6.2%. This is the first single-digit growth year China's IC industry has ever recorded.

"Our sales dropped really fast and the pressure was enormous," said Miss Zhao, a Shenzhen-based electronics supplier. She added that her company lost 50% to 60% of their orders in the second half of 2008.

Figures from the Industry and Information Technology Ministry showed that many Chinese IC manufacturers have seen their orders cut by more than 10% and utilization rate of capacity dropped to 30% in the fourth quarter of 2008. For the year 2008, total exports of electronic information products totaled 88.543 billion Yuan, a year-on-year growth of 10%, which was 13.4% less than last years'. Worse still, exports in November saw negative growth.

"Fortunately the situation is changing and our business is recovering," Miss Zhao said. Thanks to the Chinese government economic stimulus packages, they have acquired more orders. She said confidently: "This difficult situation will be temporary. Our company still has strong operations." She stressed that product development has never stopped.

Most small-to-medium companies in the industry are now focused on improving their operations. One electronics firm focused on developing measurement devices is showcasing their latest products at the IIC-China show. The company is an exhibitor at all four stops of IIC-China, which includes Shenzhen, Xi'an, Beijing and Shanghai.

Mr. Wu, a representative of the firm, said they have been looking for new prospects and making preparations for the near future. He said: "It's natural that there are ups and downs in the market. When the market is not good, we work on improving our operations and wait for next growth cycle."

In additional, the Chinese government has rolled out a number of measures intended to stimulate domestic demand, bringing opportunities to the IC industry.

In November 2008, the government announced a plan to invest 3.5 trillion Yuan for the next three years on railway projects. The relevant IC industry will surely benefit. Earlier the State Council of the PRC launched a series of measures aiming to adjust and stimulate the growth of electronics information industry with the goal to "build an independent and controllable IC development system" and to "increase investment, concentrate on efforts to upgrade the IC industry".

Exports say that China's policy has been favorable to the development of IC industry and this will pave the way for better prospects for the industry. China's SMEs should seize the opportunities brought by growing domestic demand, work on exploring new markets and new applications. They should also work on innovation and maintain leadership status in certain areas.