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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: LemurHouse who wrote (786)	3/12/2002 1:47:28 PM
From: Proud_Infidel	Respond to of 25522

China unlikely to see surge of new chip plants due to WTO entry By Jack Robertson EBN (03/12/02 12:33 p.m. EST) SHANGHAI -- China's entry into the World Trade Organization may not spur a surge of many new foreign-owned chip plants into the country as once predicted, EBN was told Tuesday at the Electronic China Exhibition here. Enrico Baravalle, president and chief executive of Epcos Ltd., said he believed that most major overseas suppliers had some time ago anticipated China's WTO membership and had opened their new plants in the country over the last several years. "These companies now have entrenched operations in China, which will make it difficult for newcomers to come into the market with their own new factories," he added. The head of the Munich-based spinoff from Infineon Technologies said his own firm "has completed its $30 million Stage 1 investment to open four plants to make or assemble most of its product line" of SAW chips, tantalum and film capacitors, surge arresters, inductors and ferrites. Stage 2 will upgrade the plants and bring more front-end operations to facilities that are used now only for assembly and test. Manas G. Roy, director of global key accounts for Yageo, said the Taiwan firm has invested $289 million over 10 years in its two large passives plants in Suzhou and Donguan. "These plants not only supply the domestic China market, but 50% of their production also is for export," he said. Roy cautioned that some of the "export" sales actually go to OEMs and contract manufacturers inside China, who ship their finished products out of the country, putting Yageo chips in the "export" category. A major incentive for building passive parts in its China plants is the 86% savings in labor costs over Yageo's plants in other parts of the world, the executive asserted. Expanding OEMs and EMS firms are also putting pressure on parts suppliers to locate finished product plants in the vicinity of their own factories. Johnson Chen, regional connector product manager for Harting Ltd., Espelkamp, Germany, said that "As big customers in China build their own super-complex factories in China, they want them to be ringed by supplier plants for assured supply" and just-in-time delivery. Another claimed benefit of China's entry into WTO -- elimination of chip tariffs -- may also be overrated in the case of components, pointed out Epcos' Baravalle. "Component tariffs had already been reduced to a very low level - in the 6% to 12% range. Removing the tariffs doesn't give that much benefit to importers," especially since companies with plants already in China produce at lower cost and have long-established relations with their Chinese customers, he said. Roy of Yageo did believe eliminating component tariffs would help his firm by reducing the cost of importing the firm's premium line of Phycomp devices from the Holland passives plants acquired from Philips Components. He said the workhorse Yageo line of passives are already made far less expensively in China, outweighing any gain from the elimination of tariffs.