Taiwan-based Asia Union Electronic Chemical Corp and the Shanghai Huayi Group yesterday agreed to establish a joint venture producing wet chemicals.

The first phase of the venture, involving an investment of 170 million yuan (US$20 million) in its first phase, will reduce reliance on imports, said Jia Kai, secretary-general of Huayi's Technical and Economic Committee, reported Friday's China Daily.

At present, only a few companies in Europe, the United States and Japan produce wet chemicals, which China needs to produce 8-inch integrated circuit (IC) chips.

"The new venture is able to reverse this trend," Jia said.

Many multinational electronic manufacturers have launched ventures in Shanghai and other parts of China to produce IC chips, but are using imported wet chemicals.

"Our purpose is to produce wet chemicals for 8- to 12-inch chip manufacturers on the Chinese mainland," said a manager at Asia Union.

According to China's 10th Five-Year Plan (2001-2005) for the information industry, the nation is expected to produce between 20 billion and 24 billion IC chips next year.

Sales will reach 80 billion yuan (US$9.7 billion), accounting for a 30 per cent share of the domestic market and a 2 per cent of the global market.

China's IC chip output was only 5 billion units in 2000, valued at 20 billion yuan (US$2.4 billion), accounting for 20 per cent of domestic demand and 0.8 per cent of the global total.

Huayi Chairman Zhang Peizhang said: "China's IC chip market is developing very quickly and will need a larger supply of wet chemicals."

China is expected to have an annual production capacity of 50 billion IC chips by 2010, with sales of 200 billion yuan (US$24.2 billion), meeting half of China's demand and five per cent of the world's needs.

The nation will need 60,000 tons of wet chemicals next year, 47,000 tons of which will be used in Shanghai.

Source: China Daily