China Became the World's Largest IC Market in 2005. Chinese IC market will reach $124 billion in 2010!

IC Insights: China's IC market grew 32% to $40.8 billion in 2005 (Figure 1), making it, for the first time ever, the largest regional IC market in the world. The 32% increase was much greater than the 8% growth rate the total worldwide IC industry displayed in 2005.

From 2000 through 2005, the Chinese IC mark et registered a compound annual growth rate (CAGR) of 33% as compared to an -8% CAGR for the Americas IC market during this same timeperiod! In 2005, China represented 21% of the world's $192.4 billion in IC consumption, up from 6% in 2000. Amazingly, as recently as 2000, the Americas IC market was more than five times the size of China's IC market.

Figure 1

A very clear distinction should be made between the IC market in China and indigenous IC production in China. Although China was the world’s largest market (i.e., consuming country) for ICs beginning in 2005, it does not necessarily mean that huge amounts of IC production in China will immediately follow.

Overall, the growth rate of China-based IC production is likely to be very strong through 2010. However, considering that China-based IC production was only about $2.6 billion in 2005, this growth will come off a small base.

China-based IC production will rise to $12.1 billion in 2010 (a 36% 2005-2010 CAGR). It should be noted that even after such meteoric growth, China-based IC production would still represent only 4% of the total forecasted $319 billion worldwide IC production in 2010! Moreover, the $12.1 billion worth of local Chinese IC production would be only about 10% the size of the $124 billion Chinese IC market forecast for 2010. McClean Report s McClean Report 2006 Publ 20060109