Innovation is key to survival for Taiwan IC designers

Commentary: Innovation is key to survival for Taiwan IC designers

Cage Chao, Taipei; Willis Ke, DIGITIMES [Tuesday 29 August 2017]

Due to lackluster business performances recorded by most Taiwan IC design houses in the first half of 2017, the overall production value of Taiwan’s IC design industry will see only limited growth for the year despite business turnaround seen in the traditional peak season in the second half of the year. The ranking of Taiwan’s top-10 IC design houses has not experienced a major reshuffle so far this year, but their overwhelming revenue declines have seen little improvement, with MediaTek even likely to fall into the “regression club.” Nevertheless, some Taiwan ASIC designers and suppliers of niche memory ICs and PC peripheral chips have managed to sustain significant growth momentum, amid the business climate that the mobile chip market is maturing with increasingly limited growth but AI applications and business opportunities are flourishing.

Over the past few years, riding on huge demand by China’s chip market and enforcing effective strategies to capture the global mobile chip market pie, MediaTek and other Taiwan designers and suppliers of LCD driver ICs, consumer ICs and analog ICs had enjoyed remarkable business growth momentum for a long while. But China IC design houses, thriving rapidly on strong government policy support in recent years, have aggressively moved to tap the massive chip business opportunities, significantly heating up market competition. In addition, the market demand for smartphones, tablets, TV, and STB products has started to trend downward after hitting a zenith, remarkably undermining the growth in the demand and production value of chips for such terminal devices. As a result, Taiwan IC designers have seen both their revenues and gross margins keep shrinking, and even MediaTek has endeavored hard to reverse the shrinkage trend this year with little success.

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