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Chengdu takes on hi-tech challenges

Posted: 25 Jun 2010     Print Version  Bookmark and Share

Keywords:Chengdu electronics market  software  LCD  IC-packaging  wafer fab 

The net result of Intel's actions had an impact in Chengdu. While Intel's settled its internal problems, employees at many other companies and ventures in Chengdu began to question their own salary structures, and, in some cases, demanded pay raises. Chengdu, which enjoyed comparatively lower labour rates, has begun to see its salaries increase.

Compared to many other cities in China—as well as India, Japan, Malaysia, Singapore, Taiwan and other Asian nations—Chengdu still has a highly-skilled workforce with competitive labour rates. This is one of many reasons why multinationals should consider investing and setting up shop in Chengdu, said Jiang Bin, director of the CDHT within the Bureau of Investment Services, during a recent presentation.

Salaries for engineers are "one-third less than those from Beijing and Shanghai," Bin said during the presentation. Besides the labour rates, Chengdu offers a number of incentives to bring investors in the region, he added.

From a strategic perspective, Bin said Chengdu is focusing on three main areas: IT, machinery and biotech/pharmaceuticals. Chengdu has a modest LCD industry, but it is quietly making a push into the LED and renewable energy fronts.

IT includes semiconductors, which has been a roller coaster ride for the local government. So far, Chengdu has seen modest development in the chip-packaging and assembly arena. Intel and Unisem have separately built IC-packaging plants in the city. Building and sustaining a front-end fab has been a different story.

One of the early chip multinational ventures in the region was Leshan-Phoenix Semiconductor Co. Ltd. Leshan is a prefecture-level city in the southern part of the Sichuan Province. Leshan is about 120km from Chengdu.

Choosing Chengdu
Formed in 1995, Leshan-Phoenix was originally a joint venture between Motorola Inc.'s former semiconductor unit and Leshan Radio Co., one of China's largest discrete IC suppliers. The venture began production in 1996.

In 1999, Motorola spun off its discrete IC unit into an independent company called On Semiconductor. At that time, On Semi took control of the joint venture in China. Today, On Semi owns 70 per cent of Leshan-Phoenix, while Leshan has a 30 per cent stake. The venture provides backend services for On Semi and Leshan.

Leshan-Phoenix is one of the most successful backend facilities within On Semi's network of chip-assembly plants, said B.S. Lee, general manager of Leshan-Phoenix Semiconductor.

The operation is looking at a new Rs.137.72 crore ($30 million) investment programme. It was fortuitous that the venture set up shop in Leshan, which remains competitive in terms of the availability of workers and labour rates, Lee said.

In contrast, there are shortages of workers—and soaring labour rages—in other chip-packaging regions, such as Shanghai, Malaysia and the Philippines, Lee said. Korea, Singapore, Taiwan and other nations face similar problems. Even Chengdu, which is only 120km from Leshan, does not have a shortage of workers, but its "labour rates are skyrocketing," he said.

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