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Chinese gov't drives investment in IC industry

Posted: 29 Jun 2010     Print Version  Bookmark and Share

Keywords:China IC industry  China government investment  semiconductor 

A new report from The Information Network claims that massive investments in China's semiconductor industry are paying off as internal production is making inroads on demand.

China's IC industry is expanding rapidly. In 2009, the country produced 4,000 crore ICs, which accounted for 25.1 per cent of domestic demand as a result of massive building programmes and the weak economy. In comparison, China produced only 20.9 per cent five years ago, according to the report, "Mainland China's Semiconductor and Equipment Markets: A Complete Analysis of the Technical, Economic, and Political Issues."

"China's chip industry, once the wunderkind of the semiconductor industry is broken, a combination of the recession and too little money being spent by the government," says Robert Castellano, president of The Information Network. "Only Rs.32,133.74 crore ($7 billion) was spent on fabs in the past five years, enough to build only two 300mm fabs."

That's soon to change as the China government is spending as much as Rs.1.14 lakh crore ($25 billion) is earmarked over the next five years to prop up the industry, including Rs.22,952.67 crore ($5 billion) for the joint venture between Elpida and Suzhou Venture Group and Rs.22,952.67 crore for Sino-chip.

Outside investment will continue to generate new fabs, thereby increasing production levels. Numerous foreign companies have set up fabs in China through investment or acquisition. The latest was Taiwan-based United Microelectronics Corp. acquisition of mainland China chipmaker Hejian Technology Suzhou Co. Ltd.

"Areas propelling the Chinese IC industry are part of the government stimulus programme such as projects to supply subsidized electronic goods to rural areas of China. The construction of 3G networks, the expansion of mobile TV operations are big areas of opportunity," added Castellano. "By 2013, a third of China's IC needs will be met internally."

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