Abstract

However, as of the end of 2006, Chinese IC design houses had yet to establish themselves as leading suppliers to the Chinese VCD/DVD player industry. There were three main reasons for this: (1) Taiwanese IC design houses such as MTK and Sunplus were already supplying Chinese VCD/DVD player manufacturers with low-priced, high-quality IC products; the Chinese IC design house did not enjoy any significant competitive advantages. (2) High patent royalties and technological obstacles have made it difficult for Chinese IC design house to move up from VCD chip design to DVD ICs. (3) Most Chinese IC design houses, and particularly the early-established firms, produce ICs for a wide range of different applications; they have not concentrated their resources on VCD/DVD IC development.

Examination of the product lines of the leading Chinese VCD/DVD IC design house shows that Silan is already able to provide not only servo chips such as motor drivers and RF amplifiers, but also CD/VCD SoC solutions. After acquiring back-end DVD IC technology from ESS in 2006, Silan also began preparing to roll out DVD SoC products. Silan's range of products is more comprehensive than that of other Chinese IC design houses.

The product lines of most other Chinese VCD/DVD IC design house consist mainly of motor drivers for VCD players and CD player. Sunray, which specializes in DVD IC, is finding it hard to win new customers, and has been experiencing financial difficulties.

With the shift away from VCD players towards DVD players and DVD recorders in the marketplace, Chinese IC design houses have to cope with significantly higher challenges, including optical technology entry barriers and economies of scale of Taiwanese design houses.