China must also learn from Taiwan's success in attracting expatriate Chinese engineers back from jobs at big U.S. firms such as Intel and Texas Instruments to fill out its limited ranks of seasoned managers.

The U.S. companies "trained [the Taiwanese engineers], and they worked hard and saw government and VC funding, so they went back to their homeland," said Tan. "The same thing is starting to happen in China" but may take the next four years, he said.

"I literally spent six months talking to CEOs in Taiwan, Shanghai and Beijing about what was hampering real growth in the China semiconductor industry," said Jodi Shelton, executive director of the Global Semiconductor Alliance, a trade group of fabless chip makers.

"You have a 10 million company here and one there, but they are all small niche players," said Shelton. "There did not seem to be a player in the China market that was going to hit the $250 to $500 million revenue mark in next five years," she said.

Shelton echoed comments about a "leadership vacuum" in China. She suggested the companies might benefit from consolidation, but deferred to the work of people like Tan sitting on China government advisory boards.

McClean of IC Insights said China has a chance to be more successful in fabless design companies than it has been to date in its stalling efforts to create a silicon manufacturing industry. But that doesn't mean spawning design companies will be an easy job, he said.

"Out of 30 fabless startups only one or two might make the Top 50 list," McClean said. "It's tough to have the staying power and good growth, and it just keeps getting more expensive," with giants such as Qualcomm, Broadcom and Nvidia in the mix, he said.