Chris Anderson

MOUNTAIN VIEW, CA—Cleanroom designer, fabricator and installer Daw Technologies Inc. in late March, signed a letter of intent with three other business entities to begin offering its services in China. Daw is the latest of a group of companies, including Motorola and Grace Semiconductor, to show interest in developing business at the very bottom of what many expect to be a steep growth curve in the world's most populous country.

Proposed partners for Daw in the deal include The Eleventh Design and Research Institute, a design and research institute with multiple offices in China; economic development company China West Investment; and government business development and promotion entity Sichuan Provincial National Investment Corp.

“China has taken great strides in attracting high-tech companies and is moving toward becoming the new center of Asian manufacturing,” says Michael J. Shea, president of Daw Technologies. “In that regard, Daw has a great opportunity to be a part of China's early development efforts while broadening our reach into an underserved and rapidly expanding cleanroom market.”

Yet some in the industry are keeping a more watchful eye on developments in China. Ken Goldstein, president of Cleanroom Consultants (Scottsdale, AZ), sees great potential in China but says there are still lingering issues that could give companies pause about jumping in feet first. “I think any company looking to do business in China has to be concerned that there are just not enough skilled workers there, and it takes time to develop a skilled workforce,” he says.

Interviewed before the recent rise in political tensions caused by the U.S. spy plane incident, Goldstein says there are other factors that play into conducting business in China, including questions about the Chinese banking system and the hard political line the country has taken regarding re-unification with Taiwan.

Still, it is hard to deny the draw of the world's largest market — one that is forecast to create great demand for integrated circuits within the next 10 years and has the world's largest labor supply at the ready.

According to Daw and other industry leaders, the time to strike is now while development in China is in its infancy. According to a company press release, Daw expects its joint venture will be finalized this summer.

• Driven by China's quickly expanding information, communications technologies and rapid adaptation to the Internet, China has grown its own $7-billion semiconductor market, which shows annual growth of 37 percent. Following this trend, China is expected to become the world's second-largest IC market after the U.S. by 2010. According to data from the CCID-MRD, a governmental research firm, China is expecting to have 40 fabs up and running in the next nine years.
• The year 2000 found enormous capital investment in semiconductor wafer fabs in China. Some of the highlights include: A US$1.63-billion investment in Zhangjian Hi Tech Park (Shanghai) to produce 50,000 wafers per month for Grace Semiconductor Manufacturing Corp; a $1.48-billion investment in two 8-inch wafer lines, to produce 85,000 wafers a month for Semiconductor Manufacturing International Corp.; and Motorola's $1.9-billion investment to produce 6,000 wafers per week to start production this Fall.