Vimicro, a leading domestic chipmaker, is setting its sights on becoming one of the world's top 10 semiconductor producers. It plans to make it to the top with increased research and development and co-operation with other industry giants, its chairman says.

"We are planning to beef up our investment in R&D to drive our further growth," says Deng Zhonghan, chairman of Vimicro, the first NASDAQ-listed chip company in China.

But Deng, 38, declines to lay down a specific timetable, saying only, "It is a long-term goal."

Vimicro, founded in 1999, is now among the world's top 30 in the semiconductor sector in terms of overall strength.

In 2005, its total sales were valued at US$950 million, a surge of 89 per cent over 2004. The growth rate in sales from 2003 to 2004 was 202 per cent; the figure from 2002 to 2003 was a stunning 879.6 per cent.

Last year, Vimicro sales ranked third among the semiconductor companies in China, according to market research institute iSuppli.

Vimicro's R&D investment now accounts for more than 10 per cent of its total income, a figure that Deng says "is still inadequate" and will increase along with its revenue.

"We are also striving to carve out a niche market by co-operating with global computer, broadband, mobile communication and consumer electronics giants, which we have already found to be effective," says Deng, referring to his company's co-operation with global industry giants including Samsung, HP, Philip and Skype.

The co-operation comes from Vimicro's providing its patented advanced technology to the global IT heavyweights.

Shortly after Vimicro's founding, Microsoft was the first IT giant to use Vimicro technology for its digital camera development. Then Fujitsu's first robot operated by mobile phone used Vimicro technology in 2002.

With backing from numerous Chinese Government departments, Vimicro launched a massive Starlight China Chip Project in 2001 which is still under way. The chips have been widely adopted by Sony, Samsung and HP.

To date, the digital multimedia chips produced by Vimicro have reached 60 per cent of the global market. The overseas market makes up more than half of Vimicro's sales income.

The co-operation trail blazed by Vimicro to penetrate the international market is significantly different from other leading private Chinese heavyweights such as ZTE and Huawei.

"We gain strength as we target market gaps," Deng explains.

High-level outreach

To build the company's overseas strength, Deng had extensive discussions with Olli-Pekka Kallasuvuo, the new Nokia president. They met during the EU-China Business Summit in Helsinki in September, where Vimicro was the only Chinese firm making a presentation.

Deng says, "Vimicro's giant step relied on its independent innovation."

During the first half of this year, Vimicro applied for more 160 patents, bringing its total number of patent applications more than 700.

The Berkeley PhD says Vimicro's capacity for innovation is far from satisfactory, in part because the company faces talent shortages.

Vimicro's major leading-edge focuses are on the camera systems of mobile phones, computers and TV, especially the thriving new areas of the industry.

The firm achieved revenue of US$33.1million in the third quarter this year, according to its third quarter report.

Vimicro's stock performance for the first three quarters after its initial public offering last November exceeded expectations, amid sluggish returns from global integrated circuit companies such as Intel, Broadcom and Marvell.

(China Daily 12/09/2006 page9)