Yageo to boost China spending in 2004

Yageo Corp (國巨), the nation's biggest maker of parts that control electricity in cellphones and PCs, will devote most of its capital spending next year to China, which is set to overtake the domestic market as its biggest source of sales.

Yageo almost triple spending on factories and equipment to US$100 million, of which it expects to spend US$70 million in China, in response to rising handset demand, said company spokeswoman Julia Wang (王玉玲), responding to a Chinese-language newspaper report.

The company is following its customers, which are shifting manufacturing of mobile phones and notebook computers to China to take advantage of lower labor costs.

Taipei-based Yageo has been quicker than Japanese rivals such as Murata Manufacturing Co to expand in the country.

"The company will be cementing its leadership position in China," said Nicholas Teo, of ING Securities Ltd in Taipei. "[Yageo] has been doing more restructuring than its rivals in Japan."

China for 32 percent of Yageo's sales in the third quarter, against 33 percent for Taiwan. The company expects China sales to surpass domestic sales next year.

Yageo rose NT$1.20, or by the 7 percent daily limit, to NT$18.40 in Taipei. The shares have doubled since Jan. 1, compared with a 35 percent gain for the TAIEX.