China Ramps up Factory Capacity in Tech-Intensive Industries

From BusinessWeek: China Ramps Up

"For years, China has been the cheap assembly shop for the world's shoes, clothing, and microwave ovens. Now, it is laying the groundwork to become a global power in much more sophisticated, technology-intensive industries that also demand tons of capital. Billions of dollars are flowing into auto, steel, chemical, and high-tech electronics plants. Driving this massive spending push is voracious domestic demand for all manner of goods as well as a big shift by multinationals to manufacture in China. As a result, China is rapidly becoming more self-sufficient in key materials and components, and setting the stage to be a major exporter of high-end products."

"SEMICONDUCTORS China's chip industry is still in its infancy, but it is expanding rapidly. Consumer-electronics and telecom-equipment manufacturers are major buyers. Some 22 new silicon wafer fabrication plants are expected to be built by 2008. Fueled by this expansion, China's chip-design industry has grown nearly fivefold, to 450 companies, during the past five years. While China's fabs are still a generation or two behind those in the U.S., Taiwan, Japan, and Europe, they're good enough for chips in appliances and other consumer gear."

"DIGITAL ELECTRONICS By any measure, China is a consumer-electronics giant. It's the leading producer of color TVs, cell phones, desktop PCs, and DVD players. Now the industry also is poised to dominate in high-end products. That means China also may emerge as a global innovator. The country boasts more than 350 million mobile-phone users -- the most in the world -- and will likely overtake the U.S. in broadband households this year. Beijing also aims to convert to digital TV faster than in the U.S. and Europe. This makes China a crucial test market for new electronics technologies and products of the future, and it means China will help shape global standards as well."