Spreadtrum and TI Maintain China Presence

NEW YORK, NY /Marketwire/ -- Semiconductor distributors in China have been posting record sales in recent quarters. To develop business in this emerging market, leading global distributors are hoping to obtain core product resources from Chinese distributors, which may be authorized to carry products from major chipmakers. The Bedford Report examines the outlook for companies in the semiconductor industry and provides equity research on Spreadtrum Communications Inc. and Texas Instruments Inc. Access to the full company reports can be found on the Bedford Web site for Spreadtrum Communications and for Texas Instruments.

According to the research firm iSuppli, distributor semiconductor sales in China increased to $33.1 billion, and sales from both distributors and chip manufacturers combined to skyrocket about 30% to $64.8 billion last year. Horse Liu, manager for China research at iSuppli said, "Distributors also acquired more sensor components business in the industrial electronics and surveillance markets."

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Spreadtrum Communications CEO Leo Li believes Chinese chipmakers are in a strong position, even as larger, global chipmakers enter the space. "We are closer to the customers, the manufacturers, and the market," he explains. Spreadtrum is what is known as fabless—it outsources production to other companies and focuses on designing chips for mobile phones. "Only in China will fabless companies grow in size in the future," argues Li.

Last year, Texas Instruments announced its first wafer fabrication (fab) facility in China. Texas Instruments argues this "puts manufacturing close to the company's growing customer base." The facility includes an operating 120,000 sq. ft. fab that Texas Instruments argues can support more than $1 billion in annual revenue and a 134,000-square-foot fab reserved for future production needs.

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