The Urgent Transformation and Upgrading for Chinese Eastern Region

Chinese eastern region will face double pressure in chip manufacturing and packaging industry.

The IC industry is capital-intensive and knowledge-intensive industry; but as the global IC market competition becomes increasingly fierce, IC enterprises growingly start to focus on cost. With the increase of labor costs and land cost in eastern coastal region, Chinese eastern IC manufacturing and packaging industry face dilemma of industrial transition or transformation and upgrading to improve profit. Compared with Midwest enterprises, the chip manufacturing and packaging and testing companies in eastern coastal region suffers the continuous rise in labor cost and land cost; meanwhile due to Chinese government attaches great importance to the development of the central and western regions, Chinese Midwest region attracted a lot of investment, gathered a large number of talents, while the original talents and capital advantage in eastern coastal region is gradually reducing. However, industrial transition need high capital investments, small and medium-sized enterprises lack the industrial transformation strength, coupled with the feasibility of the overall move for large companies is low due to the development inertial, so whether enterprises can achieve transition depends largely on whether Chinese central and western regions has attractive-enough preferential policies.

Another urgent problem facing 2013 chip manufacturing and packaging industry is how to transfer and upgrade. In the condition of losing the geographical advantage, Chinese eastern coastal manufacturing and packaging enterprises are difficult to survive in the fierce market competition if without transition and upgrading in technology and mode. Large companies with strong profitability and good financial condition must strengthen competitiveness through technical research and development, mergers and acquisitions; while the bad-profitability and low-profit-rate enterprises will encounter grim plight of “waiting for death if no transformation” or “looking for death if transition”, due to very limited research and development fee.