The rise of Shenzhen, China, as a mecca for chip manufacturers is offset by tremendous cost pressures and global competition. Around 600 chip design startups have emerged in China, most of them 10- to 20-person outfits with short life expectancies. The heads of two of the larger companies, both started in 2000, were interviewed for this article. Peter Shi's 180-person Arkmicro Technologies produces primarily video chips for a variety of devices. Arkmicro earned $10 million last year and secured another $10 million in venture financing. With these funds, it has undertaken a $1 million mask set for its first 65-nanometer product. Norman Hu's Anyka produces mobile application processors and has slightly stronger financials, with $20 million in revenue last year and a total of $30 million in venture funding. In the Chinese handset market, unlike its Western counterpart, hardware manufacturers hold more power than service providers. Also, much of the systems design is done by independent firms. Chinese chip producers enjoy such advantages as a huge domestic market, government support, and increasing access to foundries. For example, the government subsidizes half the rent in the science park where Arkmicro and Anyka are located, and a government-run design center rents access to EDA tools and licenses. However, pressures to create more inexpensive chips are constant. Given that reality, Arkmicro has developed a wide range of reusable analog functional blocks. Anyka, meanwhile, chooses to target only middle- and high-end products, where cost is less critical. Government standards have been a mixed blessing for the domestic market, but finding engineers is becoming easier as Shenzhen attracts more and more companies.