"The funds will be partly from overseas investors and part will be collected at home from multiple sources," said Guan Baiyu, chief of the Integrated Circuit Division under the Department of Electronics and Information of the Ministry of Information Industry.

At a weekend press conference Guan attended on the upcoming IC China 2003 in Shanghai, she told China Daily that investors from the United States, Europe, the Republic of Korea, Japan and China's Taiwan Province are conducting market research on the Chinese mainland.

"They will possibly build IC production lines on the Chinese mainland to produce 8-inch chips," she said.

IC China 2003, organized by the China Semiconductor Industry Association, will be held in Shanghai March 24-26. It is the country's first exhibition to display its IC industry, ranging from semiconductor component products to IC designing, chip manufacturing, packaging and testing.

As the basis of the domestic information industry, IC has occupied a prominent position in the high-tech development programme set by the State Council. Between 2000 and 2002, the country has sunk 30 billion yuan (US$3.6 billion) into construction of its IC production lines, said Yu Zhongyu, president of the association.

Ten 8-inch-chip IC production lines and six 6-inch-chip production lines are being built in or near coastal cities at the moment.

Yu said overseas semiconductor giants, such as Intel, Fujitsu and National Semiconductor, are expected to invest in the country to build new packaging and testing production lines, "setting off a new investment upsurge."

He estimated that investment will increase from 30 billion yuan (US$3.6 billion) in 2002 to 100 billion yuan (US$12 billion) by the year 2005.

That amount will be part of an estimated US$25 billion in investment by the year 2013, said Guan.

"The heavy investment will help develop IC manufacturing bases in North China, the Yangtze River Delta and the Pearl River Delta," she said.

Last year, the country manufactured 6.36 billion IC chips valued at 18.8 billion yuan (US$2.3 billion), accounting for 2 percent of the world's IC sales.

Insiders said China's IC market will witness an annual increase of 30 percent over the next three years. In 2005, it is expected to grow to 50 billion IC chips valued at 300 billion yuan (US$36.3 billion).

"But the by-then production capacity will still be far from meeting the growing demand even when the production lines under construction are put into operation," Yu said, adding that the market is expanding too fast.

Last year the country manufactured 6.36 billion chips which filled only about 20 percent of the domestic market needs. The remaining chips are imported, Guan said.

"The need to import large amounts of chips will last a long time, leaving a big space for overseas businesses to invest," she said.

(China Daily November 18, 2002)