Smartphone AP shipments to China grew 38% on year and 10.1% on quarter in the fourth quarter of 2014, as the expanding coverage of LTE services helped drive shipments.

Digitimes Research estimates China smartphone application processor (AP) shipments will see a 33.8% yearly growth in the fourth quarter of 2014, up 8.7 percentage points from previous quarter. Quarterly growth however will be 9.5%, down 2.2 percentage points from previous quarter.

The LTE market does not perform as expected in the China market while the TD-SCDMA market declines. Smartphone APs experience quarterly growth of 13.2% in China In the second quarter of 2014, with MediaTek's 3G products achieving nearly a 50% market share. In the second half of 2014, the LTE standard will rapidly replace 3G, 64-bit products will enter the mainstream market but overall shipment growth will be limited.

Facing a funding shortage for local IC manufacturers, the China State Council in June 2014 published guidelines to strengthen government support for China's semiconductor industry, while stating the short-, mid-, and long-term goals for the related industry supply chains through 2030. This Digitimes Special Report examines how the revised Central Government guidelines and various local government policy implementations will affect China's the semiconductor manufacturing, IC design, packaging & testing and materials industry.

In the first quarter of 2014, shipments by global smartphone application processor (AP) vendors to China experienced only 10.8% annual growth, with a quarter-to-quarter decline of 4.2%.

Global smartphone AP suppliers will see their shipments to China grow only 13.5% on year and drop 3.1% on quarter in the first quarter of 2014. The largest supplier MediaTek is seeing its shipments weakening and its LTE products so far still have not yet been able to help cover its existing product lines.

China foundry industry's output value, makes use of cost structure analysis for IC design firms in the Greater China region, calculates foundry revenues from the China market and of the value created by foundry companies in the Greater China region' for the China semiconductor industry, as well as the foundry companies in the Greater China regions' share of the China foundry market.

During the 12th FYP period, only semiconductor companies established from 2011 are eligible for tax incentives. Moreover, only profitable firms working in areas consistent with government goals will be offered subsidies, with a quota of 40 firms also imposed. These requirements and assessments may encourage IC design startups, while also focusing R&D resources on product and technology sectors the government views as promising. The ultimate impact will probably be to weed out poorly performing firms and expedite the consolidation of the industry.

During the 12th FYP period from 2011-2015, China's semiconductor industry policy will shift away from the pursuit of capacity and output value growth toward a focus on improving R&D capabilities and firms' global competitiveness. A policy of direct government investment will also be replaced by an emphasis on market mechanisms. This DIGITIMES Research Special Report provides comprehensive analyses of the government policies and industry dynamics that will shape China's related semiconductor industries over the next five years.

This DIGITIMES Research Special Report examines the position of Taiwan and China in the global IC market and explains how past developments, current industry trends, and the strengths and weaknesses of the respective sub-industries (in terms of technological expertise for developing applications) will affect the overall future of the Greater China IC market.