Ties That Bind - Bay Area Council Economic Institute

Investment: Building Global Businesses in a New China
complex chip products detect and avoid functional, power, signal and other problems early in the
design process.
Cadence Design Systems, Inc. of San Jose is another chip design software provider serving
the China market, with an R&D center in Hsinchu, Taiwan and sales offices in Hong Kong,
Taipei, Beijing, Shanghai, Shenzhen and Chengdu. Cadence also has strategic partnerships with
TSMC, UMC, SMIC and Chartered, supporting the Taiwan foundries’ move to 65-nm production.
Its agreement with Hong Kong’s Applied Science and Technology Research Institute
(ASTRI) provides electronic design automation technology for ASTRI’s R&D work in lowpower
integrated circuit design, wireless/wireline telecommunications, consumer electronics and
materials and packaging design for Hong Kong and Pearl River Delta manufacturers. Fremontbased
Lam Research has provided foundries in China with wafer cleaning, etching and chemical
planarization equipment, including a $33 million sale of advanced etch systems to a Philips-
TSMC-Singapore Government foundry joint venture, Systems on Silicon Manufacturing Co., and
a $100 million etch and planarization order from SMIC in 2002.
China’s Two Chip Industries
A December 2005 study for the Alfred P. Sloan Foundation, “The Globalization
of R&D in the Chinese Semiconductor Industry,” by David J.
Teece and Henry W. Chesbrough of the UC Berkeley Haas School of Business’
Institute of Management of Innovation and Organization (IMIO) looks
at the implications of China’s chip producers on global competition and the
worldwide customer base:
The Chinese semiconductor industry is best thought of as two
distinct industries sharing a common SIC code. A strong, vibrant,
and globally competitive semiconductor industry is
emerging in China. The Chinese government has been aggressive
in providing attractive incentives for foreign investment.
This new competitive sector possesses substantial industry experience,
largely provided by experienced personnel returning
from the U.S., and experienced executives and engineering
from Taiwan. It possesses some highly advanced technology,
with three 12" (300 mm) fabs already built, and more on the
way. It has been able to attract significant foreign investment
capital from Taiwan, the U.S., and Europe to finance the construction
of these highly expensive facilities. It contains some
sophisticated design firms that are creating world class products
that are gaining share in the world market.
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