Cambridge-based ARM--which develops and licenses designs for low-power chips--thinks the greatest opportunity lies in China's ballooning wireless telecoms segment.

"Clearly there is an opportunity here in China for wireless and for the network infrastructure that supports that," Chief Executive Warren East said.

ARM said it will offer its processor technology to Chinese foundries, equipment makers and software designers.

"If one does not start working with the Chinese companies today, then those companies will work with somebody else."

China boasts the world's largest number of mobile subscribers at more than 165 million. From consumer devices like personal digital assistants and handsets to chips used in networking, ARM is looking to China to be a significant market in the long term.

East said ARM has signed a deal with Shanghai's flagship semiconductor firm Huahong Integrated Circuit Co Ltd. Network gear makers Huawei Technologies and Zhongxing Telecom, and home-appliance giant Haier Group also employ ARM chips.

East declined to comment on how big a market China would actually represent in the long term. The company is due to release second-quarter results on July 23.

He said ARM could also help China's handset makers, telecoms gear makers and other technology firms climb the value chain and eventually compete with multinationals.

China now mostly makes products based on foreign technology but would prefer homegrown designs to dominate.

"The government in China wants to have Chinese companies supplying the semiconductors, the tools, supplying the software," East said. "And international companies will have to compete."

Analysts have pointed to the lack of a significant chip design industry as a significant hindrance to China's vision of creating a massive, globally competitive semiconductor industry.

"We're not concerned that the shortage of designers is a barrier," he said. "We are making a significant part of the system design available directly to design companies in China, and just making it available will help quite a lot."

It will take time--East estimated China would have a viable chip design industry in about 10 years.

(People's Daily July 11, 2002)