Figures published by the Semiconductor Industry Association (SIA) suggest that China’s chip market is likely to be the only one to show growth in 2015 (+5.3%). Overall, with year-on-year sales at -3%, up to and including November 2015, the world of chips doesn’t look great.

But if China’s manufacturing sector is slowing, and the country’s economy is turbulent, to say the least (the Shenzhen market, which is tech focused, has lost more than 40%), where does that leave the global chip market for 2016?

Well, Trendforce in Taiwan isn’t optimistic, and predicts a slight fall of 0.6% for the global chip market in 2016.

Apple seemingly trimming its iPhone production by up to 30% is not going to generate optimistic forecasts in the industry. In fact, it seems to have already sent a ripple through tech stocks – particularly those directly in the Apple supply chain.

Mergers and acquisitions in the semiconductor industry in 2015 reached an eye-watering $100bn, with150 of them sealed within the year – that’s more than twice the value of deals brokered in 2014. Freescale’s sale to NXP for $16.7bn (including debt) ranked as the largest private equity deal across any industry in 2015, although the market didn’t quite hit the level seen in 2000, when semiconductor M&A reached $115bn.

None of the 2015 headline-making deals involved a Chinese buyer…but, it’s only a matter of time before most of the deals are focused on China. With semiconductor M&A set to increase in 2016, according to KPMG, the industry is focused on China’s next moves.

Fairchild, for one, is more attracted by the deal on the table in China rather than the On Semiconductor deal, or its previous negotiations with Infineon.

I believe that the industry is consolidating and positioning itself ready to do battle with an inevitable future of Chinese semiconductor giants. China already accounts for a growing percentage of the world’s semiconductor consumption with, PWC reporting 56.6% at the end of 2014. Much of that consumption was, I believe, used to feed the global consumer electronics market.

It makes perfect business sense that China has to continue to grow and develop its indigenous chip industry. The global consumer electronics industry has long-since dictated that will be the natural order, so as hard as it might be to witness its impact on European and US semiconductor companies, we have to embrace it.

The Tsinghua Unigroup has already declared itself interested in a $47bn spending spree to help build China’s chip industry. Could Qualcomm be a first target for the group?

It would certainly be a major shift in the global landscape of the semiconductor market. TSMC, as the company that ultimately broke the West’s stranglehold on the global chip market and now rules the roost when it comes to fabless production, understands the opportunity and is opening its first 12-inch wafer fab in China.

I’m looking forward to hearing the opinions of Future Horizons’ Malcolm Penn – I feel certain he will share his insights at the IFS2016 market forecast event on 19th January. If you’re planning to attend, let me know.

But if all the signs are right, 2016, the Year of the Monkey, is set to be a year that China really takes a bite out of the global semiconductor industry.

photo credit: Which way?