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Development of Chinese and Taiwanese Semiconductor Industry’s Major Sectors, 2014 and Beyond

Symposium Industry Intelligence Programs Document Code: SVSYM14110501 Publication Date: November 2014 © Copyright 2014 Market Intelligence & Consulting Institute, a division of Institute for Information Industry. All rights reserved. Symposium Abstract

 Although Taiwan’s semiconductor industry still remains ahead of China in terms of shipment value and technology development, China has been catching up fast, with an aim to beef up the industry with a series of governmental preferential and incentive policies to attract foreign investors  With massive funding and aggressive talent poaching strategies, China has brought a negative impact on Taiwan’s fabless IC design industry where IC designers are most needed  Presently, China and Taiwan have competed fiercely in the mobile communications domain and thus Taiwanese companies have been looking for international cooperation chances while increasing integration and R&D capabilities for high-end products to maintain edge  Other than looking into the Chinese domestic market domains with high potential (mobile communications and telematics), Taiwan’s fabless IC design houses also have been trying to tap the demand in emerging markets and domains (such as medicine, IoT and sensor) so as to reduce dependenceAvailable on China Only for Paid User  As with IC manufacturing, China has been cooperating with international brands in advanced manufacturing processes in the hope of revving up its fabless IC design industry; by streamlining its IC manufacturing technologies and capacities, China aims to provide one-stop service solutions after filling the back-end packaging and testing service gap  Taiwan’s IC manufacturing and packaging & testing vendors still outperform Chinese counterparts but China is expanding fast; for this reason, Taiwanese packaging and testing vendors have been accelerating its pace to advance into high-end packaging and testing services so as to obtain orders from Chinese wafer foundries one step ahead of their Chinese counterparts

Key Developments of the Semiconductor Industry in China and Taiwan Major Battlegrounds Between the Chinese and Taiwanese Semiconductor Industries China’s Incentive Policies for the Semiconductor Industry and Their Consequences

Industry Intelligence Programs Page 2 © 2014 Market Intelligence & Consulting Institute The Chinese Semiconductor Industry Symposium Addresses More on Fabless IC Design Chinese Semiconductor Market Share Taiwanese Semiconductor Share by by Industry Sector, 2008-2013 Industry Sector, 2008-2013 100% 100%

90% 90% 24% 22% 22% 23% 23% 20% 80% 44% 44% 80% 50% 45% 50% 48% 70% 70% 60% 60% 46% 50% Available Only 50% 49% 51% 49% 50% 54% 24% Available Only for 40% 31% 31% 22% 23% 40% 32% 30% for Paid User 30% Paid User 20% 20% 32% 24% 25% 27% 29% 27% 31% 27% 28% 27% 10% 19% 10% 26% 0% 0% 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 IC Packaging and Testing IC Manufacturing IC Design IC Packaging and Testing IC Manufacturing IC Design Source: CSIA (China Semiconductor Industry Association), MIC, October 2014  The differences between the Chinese and Taiwanese semiconductor industry remain significant; with its dominance in IC manufacturing, Taiwan has relied heavily on the semiconductor industry as its major source of revenue; on contrary, China relies more on the joint ventures between international brands and Chinese local brands and packaging and testing services are major source of revenues for Chinese semiconductor industry  Fuelled byAvailable the government’s preferential Only policy, Chinese for fabless Paid IC design housesUser ‘ share has been increasing and reached over 30% in 2013 Industry Intelligence Programs Page 3 © 2014 Market Intelligence & Consulting Institute Symposium Chinese Fabless IC Design Industry Grows Rapidly

2013 Chinese IC Design House Ranking Chinese vs. Taiwanese IC Design House Shipment Value and Annual Their Global Share, 2007 - 2014 Company Revenue Major Deliverables (US$ Mln) 20 USD (Billion) 25% Communications ASIC, mobile phone Hisilicon 1,355 baseband ICs, digital video decoders 16 20% Spreadtrum 1,050 Mobile phone baseband ICs

12 15% Mobile phone ICs, smart cards, Datang Semi. 396 automotive electronic ICs 8 Available Only10% 4 5% RDA Micro. 380 Communications ICs, wireless ICs AvailableSecurity Only ICs, smart meters, for optical fiber 0 0% Nari Smartchip 350 for Paid User2014 network 2007 2008 2009 2010 2011 2012 2013 (e) GalaxyCore 300 CMOS image sensor Taiwan's Fabless IC 12.2 11.3 11.6 14.0 13.5 14.1 15.7 17.5 Paid User China's Fabless IC 3.0 3.4 4.0 5.7 8.1 9.8 12.5 15.0 Rockchip 300 Application processor Taiwan's Global Share 22.7% 20.4% 21.2% 20.3% 18.2% 18.2% 18.7% 18.8% China's Global Share 5.5% 6.1% 7.2% 8.2% 10.9% 12.6% 14.9% 16.1% Silan 293 Digital audio processor IC, MCU, PMU

Source: CSIA, compiled by MIC, September 2014 SDIC 291 PMU, smart card Allwinner 260 Application processor  Leveraging China’s subsidization for fabless IC design, some IC design houses have been able to see a rise in market share at the cost of profits as they can use government’s subsidies to make up losses, while increasing the adoption share of China-made component at the terminal end  The new no.18 document sets up a dedicated funds for semiconductor R&D that after MIIT acknowledges that the IC development is relatedAvailable to emerging industries, R&Donly funds will for be given unconditionally;Paid User companies like Rockchip, Nufront, and Allwinner have obtained funds from the government to obtain the latest IP licenses, thereby narrowing down the technology gap with international brands Industry Intelligence Programs Page 4 © 2014 Market Intelligence & Consulting Institute Taiwan Sustains Leading Position with Symposium Edge in Advanced IC Manufacturing Shipment Value of Taiwanese and Chinese Manufacturing Industry, 2007-2013 2013 Chinese IC Manufacturer Ranking Annual 35 3.6 USD (Billion) Ratio Company Revenue Deliverables ( US$ Mln) 30 3.5 SMIC 2,070 Chinese-funded wafer foundry 3.4 25 Hynix (China) 1,600 Foreign-funded Memory 3.3 Intel (Daliang) 690 Foreign-funded IDM 20 3.2 Chinese-funded IDM/Wafer CR Microelectronics 650 15 foundry/separate parts 3.1 Available only Taiwanese-funded wafer 10 TSMC (China) 585 3.0 foundry Available Chineseonly- and Japanese for-funded 5 Huahong NEC 580 for Paid User2.9 IDM/wafer foundry 0 2.8 2007 2008 2009 2010 2011 2012 2013 Xi’an XIGU Micro.Paid 260 UserChinese-funded IDM Taiwan IC Taiwanese-funded wafer 22.4 20.6 17.4 25.9 24.3 26.3 32.6 HJTC (Suzhou) 230 Manufacturing foundry China IC Sino- 6.6 6.5 5.6 7.4 7.1 8.3 9.9 210 Chinese-funded IDM Manufacturing Microelectronics Taiwan/China Ratio 3.4 3.2 3.1 3.5 3.4 3.2 3.3 ASMC 170 Chinese-funded wafer foundry Source: CSIA, compiled by MIC, October 2014  The China IC manufacturing industry still trails behind Taiwan; nevertheless, as more international brands are entering China to set up plants, the Chinese IC manufacturing industry is expected to keep on growing  Taiwan’s advanced manufacturing capabilities still allow the industry to advance China by three-folds in terms of shipment value; supportedAvailable by the increasing scale only of China’s industrialfor subsidies,Paid the shipment User value gap between Taiwan and China is expected to be shortened

Process Development Roadmap of Major Chinese and Taiwanese Wafer Foundries, 2013-2015 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 TSMC 28nm 20nm 16nm UMC 40nm 28nm 14nm SMIC 40nm 28nm 14Q2 SMIC Revenue Share (by process 14Q2 UMC Revenue Share (by process 14Q2 TSMC Revenue Share (by process technology） technology) 0.25um and above technology) 0.25/0.35um 40/45nm 5% 13% 5% 0.25um and 40nm and 0.15 above below /0.18um 15% 22% 14% 0.15/0.18um 0.15/0.18um 28nm 55/65nm 13% 0.11/0.13um 90nm 40% 37% 26% 3% 7% 0.11/0.13um 13% 65nm 65nm 0.13um 90nm 31% 15% 12% 4% 90nm 40/45nm 6% 19% Source: respective companies, compiled by MIC, October 2014

Digital Logic RF e-NVM FSI CIS PMIC Others In the short turn, SMIC still focus on 40nm Available◎ ◎ Only for Paidproduct User differentiation strategy; 65nm/ 55 nm ◎ ◎ ◎ presently, 90nm technology remains mainstream while expanding its 90nm ◎ ◎ ◎ Shenzhen and Shanghai fabs Less than 0.11um ◎ ◎ ◎ ◎ ◎ ◎  SMIC capitalizes existing process technologies for differentiation, receiving selected orders from outstanding IC design houses such as bankcard ICs, CMOS image sensors and e-Flash; fully controlling the local IC design houses’ orders while concentrating on 0.11um and below process technologies  Other than existing product lines, SMIC also steps towards high-end process technology to jointly invest into 12” fab in Beijing with Zhongguancun Development Group and Beijing Industrial Developing Investment Mgmt. Co. and a 12” wafer bumping fab with JCET Industry Intelligence Programs Page 6 © 2014 Market Intelligence & Consulting Institute Foreign-funded IDMs Play a Key Role in Upholding the Symposium Chinese Packaging and Testing Industry

Comparison of Chinese and Taiwanese IC Packaging and Testing 2013 Chinese Packaging and Testing Vendor Ranking Industry’s Shipment Value, 2007 - 2014 Annual Revenue Company Major Players (US$ Mln) 20 70% USD (Billion) China investment 18 60% JCET(Xinchao Group) 1,246 and contract 16 services 14 50% Micron (Xi’an) 1,182 Foreign IDM 12 Foreign-funded 40% Freescale (China) 1,078 10 IDM 30% Foreign-funded 8 Available RFMD (Beijing) 904 IDM 6 20% Intel SemiconductorAvailable Foreignonly-funded 4 830 only for Paid 10% (Chengdu) IDM 2 Nantong Huada 733 Chinese-foreign JV 0 0% Microelectronicsfor Paid User 2007 2008 2009 2010 2011 2012 2013 2014 China-funded & Taiwan IC Manufacturing 10.1 9.8 8.2User11.1 11.5 11.7 12.4 13.4 Tian Shui Hua Tian 571 contract making China IC Manufacturing 8.3 8.9 7.3 9.3 12.7 13.8 16.0 18 services Taiwan's Global Share 48.8% 48.9% 48.1% 47.1% 47.8% 47.9% 49.1% 49.3% Hitech (Wuxi) 526 Chinese-foreign JV China' Global Share 40.1% 44.3% 42.5% 39.6% 52.9% 56.3% 63.6% 66.3% Foreign-funded Panasonic (Shanghai) 447 IDM Foreign-funded Infineon (Wuxi) 436 Source: CSIA, compiled by MIC, October 2014 IDM  The Chinese IC testing and packaging industry is mainly constituted by foreign-funded and Chinese-foreign joint ventures; their major businesses are to perform packaging and testing services for the mother company; international IDMs such as Intel have been helping the Chinese packaging and testing industry bolster its shipment value after the IC manufacturing and IC packaging and testing facilities that it has capitalized on since 2010 begun to operate; with the help of Intel, the Chinese IC packaging and testing industry’s had outperformed Taiwan in 2011 in terms of shipment value  Fuelled by increasingAvailable demand for packaging and testing only service from for foreign -funded Paid IDMs, as wellUser as the rapid rise of Chinese local IC design houses following the policy incentives from the Chinese government, the Chinese IC packaging and testing industry has seen growth; in 2014, Chinese packaging and testing industry’s shipment value is expected to top US$18 billion, up 13% year-on-year Industry Intelligence Programs Page 7 © 2014 Market Intelligence & Consulting Institute Symposium Contents

Taiwan/China Top 10 Fabless IC Design Houses Taiwan China Rank Revenue Revenue Company Main Deliverables Company Main Deliverables (US$ Mln) (US$ Mln)

Communications ASIC, mobile phone 1 MediaTek 4,568 Mobile Phone Baseband IC Hisilicon 1,355 baseband IC, digital video decoder

2 Novatek 1,392 LCD Driver Spreadtrum 1,050 Mobile Phone Baseband IC Mobile Phone IC, Smart card, Auto 3 Morningstar 1,130 LCD TV SoC Datang Semi 396 electric IC 4 Phison 1,080 NAND Flash Controller IC RDA 380 Communications IC, wireless IC Beijing KT 5 Realtek 947 Data Communications IC 350 Safety IC, smart meter, optical networks Available OnlyM icrofor Paid User 6 Himax 767 LCD Driver GalaxyCore 300 CMOS image sensor 7 Raydium 366 LCD Driver Rockchip 300 Application processor

8 Richtek 360 PMU Silan 293 Digital audio processor, MCU, PMU

9 ILItek 323 LCD Driver SDIC 291 PMU, Smart Card 10 Orise 314 LCD Driver Allwinner 260 Application processor Source: MIC, October 2014  Observing China’s top 10 IC design houses in 2013, Hisilicon and Spreadtrum continued to dominate the Chinese market; fuelled by the increasing shipments for Huawei, Hisilicon’s revenue already exceeded Taiwan’s 3rd largest IC design house as Hisilicon’s revenue in 2010 topped around US$650 million, which was equivalent to the revenue of Taiwan’s sixth largest IC design house in 2010 and Taiwan’s fourth largest design house in 2012  Taiwanese and Chinese ICAvailable design houses compete bitterly Onlyin mobile phone basebandfor ICs; Paid have low degree User of overlap in other domains Industry Intelligence Programs Page 9 © 2014 Market Intelligence & Consulting Institute Qualcomm and MediaTek Still Dominate in Chinese Symposium Smartphone Application Processor Market

Chinese Smartphone Application Processor Market Chinese Application Processor Shipment Share Share by Chip Supplier, 1H 2014 by Number of Cores per CPU, 1H 201 Marvell Hisilicon Hisilicon 97.4% Spreadtrum 3% 3% 5% Marvell 72.1%

Apple Qualcomm Spreadtrum 33.3% 40.7% 26.0% 8% Available Only42% for Available Only MediaTek MediaTek 12.7%for Paid61.6% User25.2% 36%Paid User Qualcomm 31.7% 63.5%

0% 20% 40% 60% 80% 100% Single Dual Quad Octa  Chinese smartphone market volume reached 193 million in the first half of 2014, nearly 80% of which were provided by Qualcomm and MediaTek  Chinese application processor suppliers Spreadtrum and Hisilicon only accounted for 8%  Based on numberAvailable of cores per CPU shipped, Only five major AP forsuppliers forPaid Chinese smartphones are mainly quod-core ones; only Spreadtrum still provides dual-core processors because of lowing speed of product development in 2013  Hisilicon only provides 4-and higher-cores UserCPU for Huawei, while other Chinese brands embrace IC solutions from Qualcomm and MediaTek

Others MSM 8225(Q) MT6582(Q) MT 6589(Q) SC 8825(D) SC 8810(S) MSM 8674(Q) MSM 8974(Q) MT6592(O) Others SC 8830(Q) Others MSM 8926(Q)

14.9% 100% 100% 100% 18.6% 54.6% 24.5% 80% 80% 15.5% 60% 28.1% 25.2% 50% 7.3% 60% 8.6%Available40% Only for Paid User 11.6% 32.5% 40% 17.9% 20% 40.7% 20% 0% 0% Qualcomm MTK 0% Others Spreadtrum

PXA 3.3% 100% 15.4% 1920(Q) 100% 20.7% Others 80% 25.4% PXA 80% 986(D) K3V2(Q) 60% Available Only60% for Paid User 26.8% PXA 76.0% 40% 1088(Q) 40% Kirin 910(Q) 20% 32.4% 20% 0% 0% Marvell Hisilicon Source: MIC, October 2014 Industry Intelligence Programs Page 11 © 2014 Market Intelligence & Consulting Institute Qualcomm Spots Opportunities from the Symposium Rising Local Brands

Chinese Smartphone Market Share by Branded Vendor, 1H 2014 Chinese Branded Smartphones’ AP adoption, 1H 2014

Vendor, 1H 2014SAMSUNG, 100% BBK, 2.2% 13.3% 90% 80% OPPO, Others, XIAOMI, 70% 2.6% 19.8% 13.2% 60% GIONEE, 50% 2.5% AvailableLENOVO, Only 40% for Paid User 12.2% 30% COOLPAD, 20% ZTE, 10.8% 5.3% 10% 0% APPLE, 7.7% HUAWEI, 10.4% Qualcomm MediaTek Spreadtrum Source: MIC, September 2014 Marvell Hisilicon  The Chinese smartphone market is no longer dominated by international brands as Chinese brands Xiaomi, Lenovo, and Coolpad have fetched the places into top-five brands  Aside from Samsung, ZTE and OPPO, other top-10 branded vendors use MediaTek’s IC solutions; MediaTek had absolute edge in the first quarter of 2014; Qualcomm’s market share is rising followingAvailable Xiaomi’s switchover Only to Qualcomm’s for solutions Paid and ChineseUser operators’ growing ambition in 4G

Key component suppliers in QRD International and Chinese suppliers Display Main Board CMOS Image Sensor： Sensor： Touch IC： OmniVision, Sony, Bosch, ： Driver IC Synaptics, Samsung, GalaxyCore, Freescale, ST, Novatek, Orise, FocalTech, Goodix SuperPix, Aptina Avago, Himax, ILItek, Snapdragon Cypress, Atmel Invense, Renesas S200 AKM, S400 Intersil, CCM： LCD Module： S600 Touch Module： LiteOn, Sony, O-Film, Truly, Truly, Tianma, BOE, S800 O-Film, Truly, Sitronix TCL, BYD Toptouch, Goword Qtech

Key componentAvailable suppliers in Intel Tablet Reference Only Design for Paid User Display Main Board International and Chinese suppliers Sensor： Driver IC： CMOS Image Sensor： Touch IC： Bosch, Novatek, Himax, OmniVision, Goodix, Silead, InvenSense ILItek FocalTech GalaxyCore, Superpix LCD Module： Intel Atom BOE, Infovision, AUO, CPT, Innolux

Source: MIC, October 2014  Aside from panel driver ICs, key component suppliers in international vendors’ reference design are comprised of international and Chinese local IC design houses and Taiwanese IC design houses’ share is relatively small except in AvailableTouch IC and sensor areas only for Paid User Industry Intelligence Programs Page 13 © 2014 Market Intelligence & Consulting Institute Symposium Contents

New No. 18 Document 7 Strategic Emerging Industries of 12th Five-year Plan  Incentives in taxation, financial investment, R&D, talent poaching,  Energy-saving environmental Available Only for Paid User protection industry intelligence property rights  Next ICT Industry  Promote mobile communications, National Science & Technology IoT devices, smart devices Major Project (2006-2020)  Tri-network convergence, IoT,  Core electronic devices, high-end general cloud computing ICs, basic software product items (approx. Available Semiconductor Only  Biology Industry 60 billion RMB budget in total)  High-end equipment manufacturing  ManufacturingAvailable Equipment Only and Assembly industryfor Paid User Techniquesfor for Paid Ultra Large User Scale  New energy industry Integrated Circuit(approx. 1,20 billion  New material industry RMB budget in total)  New energy automotive industry

Source: State Council, October 2014  In the past years, China’s MIIT, Ministry of Science and Technology and Ministry of Finance have been in charge of fostering the semiconductor industry with different subsidy plans under national science & technology major projects and 12th Five-year Plan; however, target completion rateAvailable is low due to subsidy inconsistencyOnly foracross departments Paid User

IC design houses have different deployment plans due to different attributes MediaTek Core Software Design (Chengdu) MediaTek MediaTek (Hefei) Shanghai

MediaTek Software Goodix (Shenzhen) (Wuhan) MediaTek Software(Shenzhen)

Using X86 as core processor, VIA has been expanding its MediaTek’s China deployment focuses mainly on areas product lines to cover ARM and communications involving communications with subsequent investments domain and yield prominent results in communications focusing mainly on Reference Design integration AvailableMajor IC Packaging Only and Testing for Vendors Paid User Vendor Plants in Taiwan Plants in China Market demand and Kaohsiung (K5/K7/K11), Zhongli, Weihai(Shandong)-packaging and testing industrial Taichung (including 8”-12” Bumping services for separate parts clusters are ASE and high-end packaging service) Kunshan (Shanghai)-Analog IC packaging & testing components (Suzhou) main reasons why they set Changhua, Zhongshan, Hsinchu Suzhou(3rd fab)-mainly provides traditional up plants in SPIL (inlcuding 8” and 12” Bumping and wire-based packaging service Suzhou high-end packaging service) PowerTech Hsinchu Suzhou Source: respective companies, compiled by MIC, October 2014 Industry Intelligence Programs Page 16 © 2014 Market Intelligence & Consulting Institute Symposium China Takes Aim at Global Share with Dedicated Policy

State Council Issues National Outline of Integrated Circuit Industry in June 2014 – 120 Billion RMB

Notice of the State Council on Issuing Several Policies on Further Encouraging the development of Software and Integrated Circuit Industries (no. 4 document) State Council sets up an industry working group to integrate MIIT, Ministry of Science and Technology, Ministry of Finance Focal Areas How It Operates Effects on the Industry • It is anticipated that Kai Ma will act as the group leader while minister of MIIT, Miao Wei, will act as vice • The completion of group leader policy integration will Establishing • Kai Ma is the 4th-ranked VP takes over duties of the Premier, in charge of industry pipe industry, facilitate the National IC transportation, finance, human resources and social implementation of no. Working Group security work 18 and no. 4 • Group members are to include MIIT, National documents Development and Reform Commission, Ministry of ScienceAvailable and Technology and Ministry Only of Finance for Paid User • MIIT is in preparation to the group-in-charge; the national development funds are to be jointly funded by • National development Ministry of Finance, state-run banks, private-controlled funds will benefit more companies and Chinese-funded enterprises and has been on IC design than on Preparing National approved by State Council manufacturing and • National funds will be released by investing into packaging & testing Development Fund dedicated companies with growth potential • Chinese semiconductor • Aside from the central government, local governments and packaging and will set up their own development funds (Beijing has set up 30 billion RMB development fund for the testing industries will semiconductor industry) expand faster

Through National Development Fund, the central government attempts to control the IC industry by Encouraging and forcing foreign semiconductors to becoming shareholders cooperate with Chinese counterparts

UNIS China Datang NXP Datang NXP Semi. Electronics Co Telecom Developing mix-mode automotive ICs Spreadtrum RDA LeadCore Datang (Datang 51% /NXP 49%) Microelectronics Shareholding Under China’s anti-trust 16% investigation, Qualcomm may face a Solomon Great Wall Datang Semi. huge fine and may have to change 19% its royalty-charging method SDIC Panda SMIC Co-develop 28 nm Qualcomm Hua Hong TPV Available Only forIntel Paid User Capital/ Local gov’ts also set up own funds to Technology support hidden champions Investment Beijing Shanghai Shenzhen

SDIC Superpix GalaxyCore HuaHong On-Bright Country Mate Wuhan Xi’an Tongfang Technology Hefei Chengdu Diga Vimicro VeriSilicon Fudan Montage Device Source: respective companies, compiled by MIC, October 2014 Industry Intelligence Programs Page 18 © 2014 Market Intelligence & Consulting Institute China is Building One-stop Service Model with Symposium Help from International Brands Chinese mobile comm. IC market share and partnerships

Tablet Smartphone NB Strategic agreement allows Intel to obtain tablet Rockchip 9.3% channels from Rockchip and Rockchip can access Intel’s Atom 3G&4G SoC production lines Intel 6.4% 0.1% 88% covering smartphone, tablet, notebook PC Spreadtrum 5% It is reported that Intel will purchase 20% stake in RDA Spreadtrum for US$1.5 billion; through the acquisition, UNIS (state-run enterprise) bought Spreadtrum is able to strengthen chip integration and Spreadtrum for US$1.7 billion and RDA for enhance chip efficiency US$900 million China determines to build up a comprehensive mobile IC supply chain UNIS Available(GalaxyCore, Goodix, Silead, Only etc) by cooperating for withPaid major chipmakers User US$1.67 billion OmniVision 13.4% shareholding Hua Capital +PuDong WLCSP Co.

12” bumping SMIC Qualcomm JECT STATS Economies of Scale, High-end 28nm Packaging and Testing

Industry Intelligence Programs Page 19 © 2014 Market Intelligence & Consulting Institute Taiwan’s IC Design Houses Cooperating with Symposium Chinese Local Governments Comparison of Development Strategies of Major Fabless IC Design Houses Recent collaboration Strategy for selling mature products in Strategy for emerging with Chinese local China domains in China governments MediaTek continues to cooperate with Chinese Automotive IC, e-wallet Hefei (500 RMB) MediaTek white-box, branded and operators in smartphone sector Realtek strives to cut into Chinese white-box tablet Smart home appliances, Realtek and TV brands with Wi-Fi, TV and audio offerings smart meter, automotive IC

VIA continues to develop its Chinese brand; VIA Smart grid, OTT BOX Semiconductor Mfg. Telecom enters into CDMA technology license with International (Shanghai) VIA MediaTek to jointly develop Chinese smartphone to form JV with state-run market firms in Shanghai Source: respective companies, compiled by MIC, October 2014 Available OnlySet upfor R&D center Paid in Singapore, User to 64bit, Octa Core, LTE multi-mode focus on smart city, smart medicine, adopted by LG and Sony and IoT

Ethernet and communications-related Set up a subsidiary in Cooperation with European brands technology are its cores and most of Singapore, focusing with automotive ICs to obtain leading international brands are already its clients on IoT apps position  Beginning in 2013, Taiwanese IC design houses have begun to strengthen cooperation with Chinese local governments, while seeking cooperation with Chinese companies in mobile phone, automotive, smart wearables and smart cards which have economies of scale but are lack of related ICs  To reduce the impact from the rise of Chinese semiconductor industry, Taiwanese IC design houses have taken aggressive stance towards high-end product development, stepping into emerging domains while diversifying products, technologies, and customers in order to widen the technological gap with Chinese counterparts Industry Intelligence Programs Page 20 © 2014 Market Intelligence & Consulting Institute Taiwanese Firms Seeks Frontrunner Advantage in the Symposium Chinese Packaging and Testing Industry

TSMC (16nm) focuses on SMIC(28nm) communications ICs Mainly consumption ICs while joint developing 3D Looking for Korean brands to jointly ICs with DRAM brand develop NAND Flash Micron

ASE Kaohsiung JCET Expanding high-end and bumping Developing high-end packaging packaging services in Taiwan and joining hands with SMIC for Xi’an plant: US$7 billion for 12” wafer bumping 3D NAND flash SPIL Logic IC manufacturing Expanding and high-end and wafer (10nm); completes packaging ASE Kaohsiung packaging services in Taiwan DRAM 5j03rupand testing facility before Through Universal Scientific 2014 ends Industrial (Shanghai) to increase SiP PTL Available Only for Paidpackaging User lines at its Shanghai plant Increasing logic ICs and NAND Projects to invest US$30 billion into Flash Xi’an plant and whether to add SPIL logistic manufacturing for 3D IC Expanding FC CSP capacity at Eon Silicon (NOR Flash) is remains to be seen Suzhou plant seeking to enter China with NAND Flash PTL Increasing investment to NT$70 million Source: respective companies, compiled by MIC, October 2014  Leading wafer foundries in China and Taiwan have their own deployment for 3D ICs; China has succeeded in attracting Samsung to set up plant for 3D Memory and also has teamed up with Taiwanese companies in NAND Flash Industry Intelligence Programs Page 21 © 2014 Market Intelligence & Consulting Institute Symposium Copyright and Intellectual Property Policy

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© Copyright 2014 Market Intelligence & Consulting Institute, a division of Institute for Information Industry. All rights reserved. Subscription Hotline +886.2.27356070 Reproduction of this publication without prior written permission is Fax +886.2.27321351 forbidden. The content herein represents our analysis of information E-mail Address [email protected] generally available to the public or communicated to us by Web Address http://mic.iii.org.tw knowledgeable individuals or companies, but is not guaranteed as to its accuracy or completeness. Industry Intelligence Programs Page 23 © 2014 Market Intelligence & Consulting Institute