The head of the world's largest contract chipmaker predicted yesterday that China will be the next giant in the semiconductor industry and that the country would be responsible for the industry's next downturn.
"The importance of China as a market, in design, and as a manufacturing location, cannot be denied," Morris Chang (
Chronicling the development of the chip industry, Chang said that the torch passed from America to Japan in the late 1970s. South Korea and Taiwan emerged as forces in the 1980s. Now, China's industry is breaking out.
"China, I believe, will become even more important," Chang said.
Chang's comments come a day after Shanghai-based Grace Semiconductor Manufacturing Corp (
Companies worldwide have flocked to China to set up shop and take advantage of its market and manufacturing environment. For chipmakers, it is even more important to have a presence in China, since a growing portion of the world's personal computers and other electronic gadgets are made there.
Market researcher iSuppli forecasts China's semiconductor market will triple in value over the next four years to around US$80 million.
Growth in China's semiconductor industry could spark a downturn for the sector within the next four years, Chang said.
"There is a five to six year cyclical pattern in the semiconductor industry" and the next downturn could hit between late 2005 and 2007, he said.
Building too many new chip plants usually causes downturns in the industry, since the overproduction leads to falling prices.
TSMC has established a subsidiary, TSMC Shanghai, and the company earlier this week held a ceremony to celebrate the completion of the factory shell of its first plant in China. Chang has said production will likely start by the end of next year.
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