Growing Chinese Economy Spurring Companies’ Growth Plans

By Michael Sciannamea

AUSTIN, TX—May 24, 2000—Fresh on the heels of pending legislation before the U.S. Congress that, if passed, would grant China normal trading privileges, a number of U.S.-based semiconductor manufacturers are seeking a foothold in the rapidly growing Chinese economy.

Two companies that have come to the forefront. Motorola recently submitted an application to the Chinese government for an increase in their investment in the country to $3.5 billion. And Microchip Technology Inc. will be opening three new design centers this year.

According to a Motorola official, $1.5 billion of the total investment has been earmarked for semiconductor production, including the completion of a wafer fab in Xiqing near the port city of Tianjin.

Microchip’s plans include hiring 13 field-application engineers and sales representatives to staff design centers in Chengdu, Fuzhou, and Shenzhen, doubling the number of Microchip personnel in the country.

In order to receive approval for investment or expansion into the country, companies must submit a formal written proposal to the Chinese government, followed by a number of meetings between government and company officials.

According to Steve Goodyear, director of communications for Motorola Semiconductor Products Sector in Hong Kong, approval of his company’s application should occur by the end of the year.

“We don’t know of any major stumbling blocks,” said Goodyear.

Eric Sells, public relations manager at Microchip, says his company will focus on a number of product sectors with the expansion.

“We see growth opportunities in serial EEPROMS, 8-bit microcontrollers, and analog devices,” notes Sells.

When asked if the political differences between the United States and China play any role in Motorola’s business plans, Goodyear says that the Chinese are more progressive than one might perceive.

“The Chinese government is very much in favor of expanding their economy,” says Goodyear. “They are very open-minded and business-minded. They’re easy to talk with.”

Goodyear adds that the China will soon be the largest economic market in the world, and they are recognizing the fact that they must move forward in order to reap the benefits of foreign investment.

Goodyear noted that the Chinese cell phone market is projected to grow at a 37 percent rate every year for the next five years. Various reports indicate the number of China’s mobile phone users will reach 65 million by the end of this year, and will total 150 million by 2004.

Sells adds his company will be keeping its eyes on how well the Chinese economy is doing.

“Clearly, if the analysts are correct in estimating the growth of the Chinese electronics market, Microchip will do its part to keep pace,” said Sells.


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