Having enjoyed significant growth for two consecutive years, the IC design industry in China has emerged as the world's third major cluster of IC design houses, following Silicon Valley in the US and the Hsinchu Science Park (HSP) in Taiwan, according to Digitimes Research.

The three IC design clusters has also drawn attention globally, since the business model of IC design houses does not apply to the semiconductor industry in Japan, Korea and Europe.

The IC design cluster in China is similar to the one in Taiwan, having a rather narrow product range and high product homogeneity, while competing by emphasizing development costs as well as time to market, Digitimes Research indicated.

However, the China IC design industry has some merits of its own. It boasts a wider distribution channel, and has gained more support from state-run organizations or industry groups. Vendors in the cluster have also seen rapid fluctuations in their rankings.

These characteristics are likely to become disadvantages for industry consolidation, since support from the government or designated industry groups will result in different product roadmaps and development strategies, and the sharp fluctuations in vendor rankings may signal keen competition among vendors because of the homogeneity in product offerings, Digitimes Research commented.