Other key hubs for IC development in China are Shanghai and Guangdong provinces. In 1992, the Shanghai Zhangjiang Hi-Tech Park opened and now comprises over 40 IC design companies. Guangdong also boasts a number of companies that have their own independent IC design centers. These centers develop chips for mobile phones and consumer electronics, and one of them is Tianma Microelectronics Co. Ltd based in Shenzhen. The company designed and produced China's first color STN LCD product.

Beijing, however, remains unrivaled in China in terms of IC development. According to Liang Shang, chief director of Beijing-based North Microelectronics Industrial Base of China (NMIBC), the city has over 20 years of IC design experience, therefore it is able to offer high levels of talent and technological creativity at a low cost.

Beijing was China's first city to develop IC designs and has since formed a complete IC industrial chain including microelectronics research, IC design, production, testing, and materials and equipment research. It is also home to several high-level institutes including the Chinese Academy of Sciences. There are many foreign-invested research centers located in Beijing that specialize in IC R&D for consumer electronics such as image processing, A/V products and HDTV.

With 67 universities and colleges located in the city, the pool of talent is endless. Many overseas professionals have selected Beijing as the place to start their own IC design business. John Deng, a 35-year-old Beijing native who studied at the University of California, Berkeley and has worked for IBM, returned to China to run Vimicro Co. Ltd, a company founded by the MII.

Vimicro specializes in the design of imaging and video chips for digital cameras, Webcams, mobile phones and other consumer electronic products. It also owns a large share of the Internet and mobile multimedia markets. Vimicro is one of just five firms authorized by Microsoft to use Windows XP for digital imaging chips, and it owns 90 percent of the Chinese market for these chips.

Compared with Shanghai and Guangdong, Beijing also has the lowest land and labor costs. Human resource cost is 5 percent to 20 percent lower and preferential government policies give Beijing's IC design centers savings on R&D.