(Yicai Global) May 17 -- Semiconductor companies have proliferated in the Jiangbei New Area in Nanjing, capital of East China's Jiangsu province, since Taiwan Semiconductor Manufacturing Co., TSMC, decided to set up a 12-inch wafer fab plant in the area in 2016. The local industry ecosystem is increasingly characterized by a high concentration of integrated circuit, IC, businesses.

Based in the area, Nanjing Jiuxin Electronics Technology Co. can now visit and chat with clients anytime to collect feedback and can solve any issues related to the use of its products immediately, Wu Lifeng, general manager of the firm, told Yicai Global.  Wu's optimism about Jiangbei is shared by many other market players.

Leading Chinese chip designer Spreadtrum Communications Inc. has also set up a subsidiary in the area with an investment of CNY5 billion (USD785,000) to research and develop central processing units, often referred to as CPUs, 5G wireless technology and intelligent mobile terminal systems and software. The headcount at the subsidiary will reach 1,000 in five years, and sales revenue is projected to hit CNY3 billion.

Nanjing is one of the first 5G pilot cities in China, which is another important reason for Spreadtrum to open the unit in Jiangbei New Area, a manager at the company told Yicai Global.

The development of the area into a semiconductor city comes at a critical time for China, which is being stripped of American technology after the US activated a denial order against the nation's second-largest telecoms equipment maker ZTE Corp. last month, preventing it from purchasing tech from the United States for seven years.

Integrated Circuit Base

Jiangbei New Area is currently home to some 200 IC companies including sector's leading Chinese and multinational firms such as TSMC, Tsinghua Unigroup Ltd., the partner company of Spreadtrum, Synopsys Inc., Zgmicro Wuxi Corp., and Solomon Systech Ltd. through direct representation, subsidiaries or partnerships.

From chip design, wafer fabrication and packaging to finished product testing and terminal manufacturing, upstream and downstream semiconductor businesses are springing up in Jiangbei at an accelerating pace. More than 100 IC companies emerged last year alone, and about half of the top-10 Chinese IC designers have settled in the area so far.

MindMotion Microelectronics Co. is among the area's first tenants. It is one of the few Chinese companies that have developed a 32-bit micro control unit, or MCU.

Apart from TSMC taking the lead in settling in the area, the company also needed Jiangsu's strong market foundation to boost MCU applications, said Jiang Xingyuan, the research and development director at MindMotion Nanjing Integrated Circuit Co. Unlike Shanghai-based companies who tend to prioritize IC design, their counterparts in Nanjing are mostly oriented to application providers.

"The Shanghai company now has more than 40 people, and the headcount in Nanjing is over 30, which will increase to 100 in about three years, and the Nanjing firm will turn into an R&D center," Jiang said.

Spreadtrum encountered difficulties with recruitment and housing arrangements when it started operations in Jiangbei in 2016, said the manager of the Nanjing subsidiary. However, as the local talent acquisition and housing policies improved, the firm has attracted nearly 100 IC professionals over the past year.

To make recruitment easier for the companies, the Jiangbei local government offers CNY800 in subsidy for every employee per month. About 90 percent of the people MindMotion Nanjing recruited last year are graduates from local universities in Nanjing.

Professor Yang Jun at the national application specific integrated circuit, ASIC, system engineering research center of Southeast University told Yicai Global that he plans to move teachers and students from the lab to Jiangbei New Area so that they can directly interact with the companies there.

Song Yonghua, founder and chief executive officer of Bouffalo Lab, chose Jiangbei as the R&D headquarters because he is a native of Nanjing and that the area is poised to become an IC industry base in future, which will benefit the firm's development, he told Yicai Global.

Furthermore, Song is also impressed by the local government's open-mindedness and pragmatic approach, he added.

Editor: Mevlut Katik