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Gov't investment boosts China 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 found that the 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 Mainland China produced 40 billion ICs, which accounted for 25.1% of domestic demand as a result of massive building programs and the weak economy. In comparison, Mainland China produced only 20.9% 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 $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 $25 billion is earmarked over the next five years to prop up the industry, including $5 billion for the joint venture between Elpida and Suzhou Venture Group and $5 billion 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 program 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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