BEIJING – It’s hard to argue against the widely held notion that the weaknesses of China’s fabless companies lies in their inability to go beyond the Chinese market. Put more bluntly, Chinese companies are just too content with a cheaper product that’s “good enough” for the domestic market, but not ready for prime time.
[Get a 10% discount on ARM TechCon 2012 conference passes by using promo code EDIT. Click here to learn about the show and register.] GigaDevice’s CEO and president Yiming Zhu, however, takes the argument to another level.
The target market for Chinese fabless chip companies should exceed the 1.3 billion people in China, and reach out to the six billion people in the developing world, he says.
Of the earth’s current population of seven billion, Zhu points out, “one billion people in the developed countries have already had a chance to try or buy iPhones. There are six billion people in the pool who also want digital life, but can’t afford iPhones.”
If China’s fabless companies can play a role in filling the digital divide with low-cost products, it’s more power to China. (Rockchip, China’s fabless apps processor vendor, for example, is supplying its CPU to 7-inch media tablets made in China, which are being purchased by Thai government for its “One Tablet Per Child” program.)
More important, Zhu made a point about which I’d previously given little thought. This strategy might actually buy time for China to survive, hone its digital skills and catch up with the West. Pursuing a market of six billion acutely price-sensitive consumers over the next 5-10 years “will give China time to grow,” he said.
Is this view a little too Utopian to believe?
It may be.
