China's chip market is likely to prosper in 2016 given the favorable policy environment and soaring demand for low-capacity memory devices, according to CSIA Wednesday. In 2015, chip sales in China jumped 7.7 percent year on year against a mild decline in global market, making it the only area reporting positive sales growth around the world, according to data from China Semiconductor Industry Association (CSIA).
As the world's largest memory chip market, about 12 billion US dollars of dynamic random-access memory (DRAM) and 6.67 billion US dollars of NAND Flash were purchased in China in 2015, accounting for 21.6 percent and 29.1 percent of their global supply respectively. Some industry experts say that alongside rising need for smart wearable devices as well as in-car electronics and set-top boxes, there will be great demand for low-capacity NAND Flash and global giants exiting the low-capacity memory chip market will be good for domestic market players.
In overseas market, China's chip makers are expected to participate in more M&A in the following two years. Recently, domestic chip producer - Tongfang Guoxin Electronics Co., Ltd. (002049.SZ) announced it planned to raise 80 billion yuan via private placement, of which 60 billion yuan would be poured into its memory chip factory, 3.79 billion yuan spent on buying 25 percent equities of Powertech Technology Inc. (PTI) and becoming the latter's largest shareholder and 16.2 billion yuan used to finance its M&A of upstream and downstream chip businesses.
Currently, China's chip industry remains somewhat underdeveloped and M&A in overseas market can be an important way of expansion for them, says Gui Haoming, chief market analyst of Shenyin Wanguo securities research institute. Take Tongfang Guoxin Electronics as an example, investors of its private placement are all its affiliates, hinting they are striving to win a bigger say in China's chip industry, Gui adds.
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