Hitachi invests more in Chinese chip venture

Hitachi Ltd. intends to increase its investment in a semiconductor joint venture in China to increase mobile-telephone component production for the fast-growing domestic market.

The Tokyo-based company plans to invest US$12 million in Hitachi Semiconductor (Suzhou) Co. Ltd. in the joint venture, taking its share of the company to 80 percent, company spokesman Masahiro Takahashi said. Its partner in the venture, EDB Investments Pte. Ltd. which is the investment arm of Singapore's Economic Development Board, will see its share drop from the current 30 percent to 20 percent following the investment.

Hitachi said the money will be used to establish a backend processing line for radio frequency high-power amplifiers, a vital component for cellular telephones, and to expand the plant's current DRAM (dynamic random access memory) processing operations. The mobile telephone chips will be sold to companies in China.

The move to invest more in China comes hot on the heels of a January announcement by NEC that it will invest an additional 35 billion yen (US$286.9 million) in a joint venture chip manufacturing company in China. NEC said the investment was in response to increased demand in China for integrated circuits for use in mobile communications equipment.

The market for handset components is booming as China confirms its place as the second largest cellular market in the world. The country saw 41 million new subscriptions to mobile services in 2000 to take the total number of subscribers to 85 million, according to a People's Daily report. While impressive by international standards, the number still represents only a fraction of China's 1.25 billion [B] people, and so strong growth is expected for some time.

As a result of the increased demand for mobile telephone chips, NEC said it expects the total size of China's semiconductor market to increase from 900 billion yen in 2000 to 1.4 trillion yen by 2002.

Hitachi, in Tokyo, can be contacted at +81-3-3258-1111 or found online at http://www.hitachi.co.jp/.

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