Asia Essentials

On the back of policy and funding support, China’s IC supply chain hasincreased its technology capabilities and scale quickly, and we believe this trendshould continue in the coming years. We forecast China IC industry revenue tooutgrow the global market at a 20% CAGR in 2017-18E. The number of ICdesign companies in China has increased significantly this year, which webelieve will fuel the growth of local IC manufacturing and OSAT companies.

    Reacting to the strong demand, we see many Chinese/foreign foundriesplanning to build new fabs in China, while OSAT companies are trying toimprove technology capabilities/scale through M&A. We think the growing Chinasupply chain will impact smaller Taiwanese peers and IC design companiesmore, while foundry/OSAT leaders like TSMC/ASE will maintain their positions.