1 Presentation: China’s Electronic Manufacturing Service Industry China’s Electronic Manufacturing Service Industry EXECUTIVE SUMMARY: General China Electronics Industry Overview China’s Semiconductor Industry China‘s Device-Level Electronic Packing Industry China‘s PCB Fabrication and Assembly Industry China‘s Computers Industry Telecommunications Industry Other Electronics Industry Conducting Business in China Presented by: M. Amine Essafi

2 Presentation: China’s Electronic Manufacturing Service Industry General China Electronics Industry Overview China is clearly the fastest-growing economy in the world Electronics has become one of the most important industries in the nation. The electronic information industry in China grew rapidly after the liberalization of the economy. In 2005, China's electronic information sector made up 17% of the country's economic growth, Manufacturing was the sector that grew the fastest The Chinese central government is encouraging foreign investiment and providing massive incentives in the so-called “pillar industries”. The future of China is bright: - well-trained technical labor - large market - scientific research and development new technologies - growing economy that provide ideal conditions

3 Presentation: China’s Electronic Manufacturing Service Industry China’s Semiconductor Industry The world’s number one producer of : TV’s, recorders, VCR players, telephones, calculators, refrigerators and air-conditioners The number one: cellular phone market, in IC consumption, has a leading-edge semiconductor industry, and the largest PC producer ► China is now the largest integrated circuit (IC) market in the world ! ► The Chinese government has made significant efforts to development its semiconductor industry and encourage foreign technology transfer and management support to boost the domestic industry and reduce reliance on imports. ► Motorola, NEC, Mitsubishi, STMicroelectronics, Philips, Siemens and Toshiba: transferred technology, invested capital, build wafer fabs, and formed joint ventures with chinese partners.

4 Presentation: China’s Electronic Manufacturing Service Industry China’s Semiconductor Industry Percentage % The Propotion of China‘s semiconductor Sales Value to Semiconductor Worldwide Markets Sales Value: Worldwide Semiconductor Market by Region in 2004: No.Company NameSales Value (US$M ) 1 Semiconductor Manufacturing International Corporation918 2 Shanghai Huahong NEC Electronics Co., Ltd Hejian Technology (Suzhou) Co., Ltd Shanghai Advanced Semiconductor Manufacture Co., Ltd Shanghai Grace Semiconductor Manufacture Co., Ltd SG-NEC Co., Ltd Wuxi China Resources Mircoelectronics Co., Ltd.95 8 CSMC-Resources Co., Ltd.80 9 Jilin Huaxing Electronics Group Co., Ltd BCD Semiconductor Manufacturing Co., Ltd.49 China‘s Top 10 Semiconductor Manufacturing Companies in 2004:

5 Presentation: China’s Electronic Manufacturing Service Industry China‘s Device-Level Electronic Packing Industry Over a period of time the electronics packing sector in China has progressed at an accelerated pace, and China now has a complete supply chain to manufacture electronics ranging from semiconductor devices to complete systems. Foreign Manufacturers with packaging plants in China: Motorolla, IBM, Intel, Mitsubishi,… Domestic Manufacturers: Hua Jing Electronics Groups, Shanghai Belling Stock Holding Co.,Ltd., NEC Electronics Corp.,…

6 Presentation: China’s Electronic Manufacturing Service Industry China‘s Device-Level Electronic Packing Industry Adopted Technologies and Levels: The major electronics packing technologies include: plastic packing, metal packing, hybrid microcircuit packing and highly-density packaging. Many Manufacturers had expanded their production due to the rapidly increasing demand of the telecom and consumer electronics industries. These manufacturers produce low-end products compared with foreign packing companies.

7 Presentation: China’s Electronic Manufacturing Service Industry China‘s PCB Fabrication and Assembly Industry China is the fastest growing country in the PCB Fabrication industry and has become one of the world market leaders in PCB Assembly. Foreign Manufacturers from Taiwan, the U.S., Japan, Singapore and Europe Domestic Manufacturers China Circuit Technology (Shantou) Corp.

8 Presentation: China’s Electronic Manufacturing Service Industry China‘s PCB Fabrication and Assembly Industry China is the most attractive region in the world for electronics manufacturing services. Developed electronics market that many international corporations are targeting. ► China now has a complete supply-chain capable of producing electronics products and seems to be poised to rival, if not surpass, the U.S. and Japan as leaders in the electronics industry.

9 Presentation: China’s Electronic Manufacturing Service Industry China‘s Computers Industry China‘s computer industry dates to China goals in computer industry was in four area: Build-up domestic industrial capability of core computer technologies. Renovate and modernize traditional industries using computers. An effort to consolidate the domestic computer industry to significantly improve its competitiveness both domestically and internationally and to standardize it within the domestic market. An effort to develop computer technologies with focus on supercomputers

10 Presentation: China’s Electronic Manufacturing Service Industry China‘s Computers Industry The Major Domestic Computer Manufacturer: Legend Group/Lenovo: was established in 1984 by 11 researchers from the Institut of Computing Technology, a branch of the Chinese Academy of Science, with a capital investment of US$24,184. The first Chinese PC maker that opened a design center in California’s Silicon Valley. The No.1 in the local desktop market with about 30% share and its share in notebooks was 17% the the first quarter of 2005

11 Presentation: China’s Electronic Manufacturing Service Industry Telecommunications Industry China‘s telecom industry has made significant progress in the past decade, China is today not only the biggest market in the world, but it has become a producer and exporter of ist own telecom equipement, playing a role in the business market. China‘s domestic manufacturers: HUAWEI, ZTE and POTEVIO Group dominate much the switching, mobile, transmissions and data communications equipement market. HUAWEI alone holds more than 15% market share of the Asian optical transmissions equipement market, which is greater than Alcatel‘s. Almost 80% of Lucent Technologies‘ products are made by companies in China

12 Presentation: China’s Electronic Manufacturing Service Industry Telecommunications Industry Prospects: China‘s domestic telecom equiments makers are increasingly looking overseas for market growth:  Developing markets of South Asia and Southeast Asia: ZTE‘s first major international contract was in Pakistan, and HUAWEI operates a research and design facility in Bangalore, India.  Chinese operators are targeting now the major industrialized economies too: ZTE has established a joint venture with a Newcastle-based partner, and is operating R&D facilities in Sweden.  Also gearing up to target European mobile operators and consumers.

13 Presentation: China’s Electronic Manufacturing Service Industry Other Electronics Industry Specific electronics applications industries in China: TV Industry (HDTV and Digital TV) DVD Industry Cellular Phone Automotive Electronics Industry Avionics and Aerospace (Space) Electronics Industry Medical Electronics Industry Military Electronics Industry (Domestic and for Export)

14 Presentation: China’s Electronic Manufacturing Service Industry Conducting Business in China Why should someone want to conduct electronics manufacturing in China ? + A Low-Cost, High-Quality Labor Force + A Complete Supply Chain with World-Class Infrastructure + Favorable Tax Structure and Low Capital Costs + Large Internal Market + Entrance into World Trade Organization - Shortage of Energy and Resources - Inadequate Land Transportation System - Currency Revaluation and Financial System - Deficiency of Enforcement in Intellectual Property Protecion

15 Presentation: China’s Electronic Manufacturing Service Industry Thank you for your attention Sources: MANAGEMENT FORUM: Innovation in China's Electronic Information Industry, Gou Zhongwen Vice Minister, Ministry of Information Industry, China Market Analysis Report: China’s Electronics Industry Israel Ministry of Industry, Trade and Labor and Israel Export & International Cooperation InstituteMarket Analysis Report: China’s Electronics Industry Israel Ministry of Industry, Trade and Labor and Israel Export & International Cooperation Institute China's Electronics Industry: The Definitive Guide for Companies and Policy Makers with Interest in China, Michael Pecht - 10 August 2006China's Electronics Industry: The Definitive Guide for Companies and Policy Makers with Interest in China, Michael Pecht - 10 August 2006 China, Der Lange Marsch zur Forschungsnation, Technology Review Magazine 05/2013 Presented by: M. Amine Essafi