LONDON — The Chinese government is preparing to spend $25 billion on wafer fabs
to boost domestic chip manufacturing over the next five years, according to
market research company The Information Network. This is set to boost the proportion of
local demand met by domestic wafer fabs and diminish Chinese chip imports, the
analysis firm said.
Investment in Chinese semiconductor production is already paying off as the
nation gradually meets a greater proportion of its demand from internal sources
but it is set to climb steeply over the next three years.
In 2009 Mainland China produced 40 billion ICs, which accounted for 25.1
percent of domestic demand. In comparison, Mainland China produced only 20.9
percent of its requirements in 2003, according to the analysis company. The
Information Network now expects domestic production to account for 27.1 percent
of domestic demand in 2010 and climb to 29.0 percent, 30.8 percent and 33.4 in
the succeeding years as spending is ramped dramatically in China.
However, the situation could have been far ahead of where it is today if the
Chinese semiconductor industry had lived up to its potential, according to
Robert Castellano, president of The Information Network.
"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. Only $7 billion was spent on fabs in the past five years, enough to
build only two 300-mm fabs," he commented.
That's soon to change as the Chinese government has earmarked as much as $25
billion to be spent over the next five years, including $5 billion for a joint
venture between Elpida and Suzhou Venture Group and $5 billion for Sino-chip,
according to The Information Network.
"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," said Castellano.
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