Chip Boom in Mainland China

Finally, some good economic news from somewhere in the world. According to a report titled "Mainland China's Semiconductor and Equipment Markets: A Complete Analysis Of The Technical, Economic, and Political Issues," that was recently published by The Information Network , demand for ICs and equipment in Mainland China is very strong and will continue to show positive growth between 2001 and 2005. In 2000, the country produced 5.9 billion chips, which accounted for 27% of domestic demand. Most high-end products used in computers and mobile phones had to be imported. Domestic semiconductor companies also had to import designs from overseas companies. The report says that help is on the way from global companies like Motorola, Infineon, NEC, Mitsubishi, STMicroelectronics, Philips, and Toshiba, who are all transferring technology, investing capital, building wafer fabs, and forming joint ventures with Chinese partners. By 2005, Chinese-produced semiconductors will not be able to keep up the country's demand. At that point, only 23% of chips needed to meet demand for consumer electronics, telecommunications, and computers in China will be domestically manufactured. The front-end semiconductor equipment market was less than $500 million in 2000, but will exhibit nearly a 30% growth rate through 2005, significantly better than any other geographic region. For Mainland China, all of this is obviously good news. IC production is a fairly good economic indicator because chips go into all of the electronic gadgets bought by prosperous consumers - or so goes conventional wisdom.