Motorola Makes $1.9B China Deal

Electronic News, August 28, 2000

Will build manufacturing hub to target growing market

Noting that the semiconductor market in China is growing at 17 percent per year and will reach $18 billion by 2004, Motorola Inc. said last week that the Tianjin municipal government approved the company's $1.9 billion manufacturing hub.

Motorola will focus its investment on two sites. The first will be the Motorola Tianjin Integrated Semiconductor Manufacturing Complex, dubbed MOS 17, that will produce wireless communications devices, automobile electronics, and consumer products and will employ 2,400 people when full production is reached in 2002, according to the company.

"The site will become one of the largest integrated semiconductor manufacturing facilities in the world, and the most advanced in China," said Christopher B. Galvin, Motorola's chairman and chief executive officer, in a statement.

The second site, Motorola's Asia Telecommunication

Product Manufacturing site, will produce 2G, 2.5G and 3G cellular subscriber and infrastructure products for GSM, TDMA, WAP, wireless Internet protocol, GPRS and related data technologies for domestic and international market consumption, the company said.

Motorola said it will initially sell to the local market, then expand into the Asia/Pacific region. Claiming it is already the leading mobile phone supplier in China, Motorola expects a 37 percent growth in sales over the next five years. The move brings the Schaumburg, Ill.-based company's total investment in China to $3.4 billion making it the largest foreign investor in China, according to Motorola.

"This latest investment ... significantly strengthens our partnership with the people of China to create new business opportunities," Galvin said.

Motorola said it currently has 10,000 employees in China with research centers and labs employing more than 800 researchers at a total investment of $180 million. Motorola anticipates that the number of researchers will grow to 1,500 by 2001. In addition, the company said it is working on several design projects with eight leading Chinese universities and agreements with more than 175 local suppliers, employing more than 15,000 people.

On top of 17 percent per year semiconductor market growth, Motorola believes GSM, CDMA and GPRS network infrastructure demands from China will exceed 650,000 channels in 2000 and grow to more than three million channels in 2004.

The company believes subscribers will increase from 68 million in 2000 to nearly 250 million in 2004 with replacement rates increasing from 10 percent in 1999 to 15 percent by 2004.

"We have a long, valued relationship with the people of China," Galvin said.