Applied, ON set up chip labs in China

Applied Materials Inc., the world’s largest vendor of chip manufacturing equipment, opened a new production line machinery lab in China on Thursday to develop a range of equipment.

Separately, ON Semiconductor Corp. is teaming up with Chinese electronics manufacturer Hisense Electric Co. Ltd. to establish a joint center to develop energy-saving power chips for LCD TVs (liquid crystal display televisions), plasma display TVs and CRT TVs (cathode ray tube televisions), it said in a statement Friday.

The Phoenix, Arizona, power-management chip supplier will locate the lab in a building owned by Hisense in Qingdao, China, home to the country’s most famous brewery. The lab will develop products for Chinese customers, ON said.

Applied Materials, of Santa Clara, California, held an opening ceremony in Xi’an, China, for its new 106,000 square foot facility for developing chip manufacturing equipment that uses 200-millimeter (8-inch) silicon wafers, as well as the company’s most advanced metrology and inspection products.

The new centers highlight faster growth in foreign investment in China’s chip sector. U.S. memory chip maker Micron Technology Inc. announced the opening of a new chip factory in China earlier this week, and Intel Corp. is widely expected to announce a major chip plant investment in the country next week.

Intel Corp. CEO Paul Otellini will hold a news conference in Beijing on Monday for a “major announcement” next week. Although the company remains tight-lipped about the details, Otellini’s planned visit follows closely on the heels of a Chinese government announcement that Intel has been given approval to build a US$2.5 billion chip fabrication plant in Dalian, on China’s northeastern coast.

Asia is Applied Materials’ most important market, accounting for 65 per cent of orders received by the company during the first quarter of its 2007 fiscal year. Taiwan accounted for 24 per cent of new orders, South Korea 19 per cent and Japan 12 per cent. China and Southeast Asia together accounted for 10 per cent of its new orders.

Although China accounted for a smaller portion of sales than Taiwan, South Korea and Japan, many analysts see China as the market with the biggest growth potential in the future.

The company said the majority of its manufacturing remains in Austin, Texas, while its main product development center is in California’s Silicon Valley.

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