Funky media players help China's specialty chipmakers thrive

Taipei: Funkier phones and hip media players have helped boost China's fledgling sector for designing specialty chips, even as the field of start-ups comes under pressure to develop more niche markets to keep growing.

The fast-rising group of small design houses have found their sweet spot by developing the central chips - the so-called "brains" - for niche products aimed at very specific user groups and markets.

Big names seldom go after such markets due to their small size, leaving the sector as fertile ground for entpreneurial firms like Chinese ones with names like Spreadtrum, Chipsbank, Chipnuts and Comlent.

The explosion in gadgets combining cellphones, cameras, music and media players and other functions has helped fuel the trend, as big firms look for the next mass-market sensation, leaving less obvious niche products to smaller companies.

But with cellphones and other devices taking on more complicated functions, such smaller firms are finding it more and more difficult to pinpoint the next specialty moneyspinner.

"That's a million-dollar question," said Zhan Jun, a vice-president at Chipnuts, which specialises in chips for smartphones and portable media players, when asked to name the next product with significant potential. "If it is a standard product in large volumes, we can't compete, but if it's more personalised, we can," he said.

"Cellphones are like black holes. They suck everything into them: from cameras to MP3, MP4, radio, GPS."

Crowded

China's chip design market is increasingly crowded and already host to major global chip firms such as Texas Instruments Inc, Analog Devices Inc and Freescale Semiconductor.

The small houses have been able to grow by focusing on areas with limited market potential, often at the low- and high-end of the product spectrum, as the big firms invested heavily in chips for cellphones and other new applications with mass market potential, such as flat-screen TVs.