In an effort to take the economy to the next level, Beijing has designated Shanghai as the heart of a 21st century electronics industry that will not only assemble PCs and cell phones but also design them and sell them to the world. China is now looking to make special application chips for PCs, mobile phones, and a wide array of other products. It's a bold move. While low labor costs give China an edge in PC assembly, the semiconductor industry relies instead on billion-dollar investments in delicate machinery. China's unreliable infrastructure can hinder the operations of a chip plant, which needs to run almost constantly to make money.
China is determined to prove the skeptics wrong.
Local demand for chips is growing as more and more Taiwanese PC makers shift their production to the Shanghai region. And finally, boosters say, the two leading universities, Fudan and Jiaotong, could play a nurturing role similar to the California institutions in Stanford and Berkeley. The support is excellent,'' says Richard Chang. Not all the investment is going into foundries. Since last year, the number of Shanghai chip-design houses has doubled, to 56.