U.S. Leads in Electronic Design Influence, but China is catching up

Although China is rising fast, the United States remains the leading player in worldwide electronic system design, a position that gives it enormous influence over the global semiconductor supply chain, according to data from iSuppli Corp.'s new Design Influence Tool (DIT).

Electronic system design in the United States is expected to drive 33.5 percent of global semiconductor purchasing in 2005, amounting to $58.7 billion worth of chip sales for the year. Japan will be ranked second, with its design activity generating 26.1 percent of worldwide chip sales, followed by Taiwan at 9.9 percent, Germany at 5.8 percent, China/Hong Kong at 5.4 percent and South Korea at 5.3 percent.

Design of electronic goods leads directly to equipment production, which in turn drives semiconductor consumption. Companies that engage in electronic-equipment design also are responsible for specifying the use of particular chips in the products being developed. Thus, these companies and the nations where they operate have a huge influence on semiconductor spending.

U.S. in the Lead...
The fact the United States is the largest nation for electronic design contrasts sharply with the country's propensity to outsource manufacturing to other regions, noted Greg Sheppard, executive vice president for iSuppli. While actual production of electronic equipment is decreasing in the United States, the influence of the nation's design activity is on the rise.

More than 40.2 percent of new semiconductor sales in 2005 will be driven by design activity in the United States, according to the DIT. This is by far the largest growth among the top-10 design nations. Japan will be second, accounting for 15.5 percent, followed closely by China/Hong Kong at 14.8 percent and then Taiwan at 10.1 percent.

The U.S. design industry is being aided by relatively strong shipment growth in 2005 in the markets for industrial and automotive equipment, although the nation has robust activity in all application markets, including consumer electronics and computers, Sheppard said.

...but China Has Designs on Design
While still trailing its manufacturing activities, China is gaining electronic-design momentum and is moving rapidly into the upper echelons of the market. China in 2005 will surpass South Korea to take the number-five rank in design-driven semiconductor purchasing, and is on track to pass Germany to take fourth place next year, according to Sheppard.

When combining China/Hong Kong and Taiwan together, the region's performance is even more impressive, with the three regions collectively generating almost as much design activity as Japan this year. By 2006, China/Hong Kong/Taiwan likely will surpass Japan and become the world's second-largest region for design-driven semiconductor sales after the United States, according to Sheppard.

Design influence will decline in a small group of countries in 2005, including Israel, Canada, Switzerland, Malaysia and Belgium.

About the Design Influence Tool
iSuppli's DIT presents design influence in terms of semiconductor purchases in U.S. dollars for 169 OEMs worldwide representing 75 percent of the global chip market. Data is broken down by the eight major application markets: computer, peripheral, consumer, wireless, wired, automotive, industrial and military/aerospace. Data also is divided by 29 semiconductor device categories and by 41 countries.

iSuppli is offering four regional versions of the DIT: Americas, Japan, Asia-Pacific and Europe Middle East and Africa (EMEA).

The DIT is designed to be used by semiconductor suppliers for sales benchmarking and for country resource planning. It's also useful to OEMs for competitive benchmarking.

iSuppli Hosts DIT Webinar
iSuppli will host a DIT Webinar will held on Wednesday, Jul. 20, at 8:30 a.m. U.S. Pacific time.  Attendees can call in to the Webinar to hear Sheppard's comments and can use an Internet browser to view the presentation slides. Sheppard will take questions from Webinar attendees.

For more information, please visit: http://www.isuppli.com/events/default.asp?EventCode=WB