STMicroelectronics (ST), the world's No 5 chipmaker, expects business growth in China in the next two years to be higher than the 20 per cent increase rate of China's integrated circuit (IC) market.

"We plan to become the No 1 player in China, reinforcing our position as a leading player in this market," said Bob Krysiak, corporate vice-president and general manager of ST Greater China.

According to research firm iSuppli, ST is No 3 in China's IC market.

In 2005, ST Greater China accounted for 25 per cent of its global sales.

ST said its sales in China, since 1999, have steadily outperformed the local market, growing at a compound annual growth rate of 31 per cent, compared to 24 per cent for China's semiconductor industry as a whole.

The firm is now expecting its hefty investment in China to help it seize the crown in the country's IC market.

This year ST plans to spend US$500 million on a wholly owned test, marking and packaging (TMP) facility in Shenzhen, a booming city in South China's Guangdong Province.

This year ST will also spend US$10 million on its newly launched Greater China region headquarters in Shanghai, said Krysiak.

Last April, ST held the groundbreaking ceremony for the ST-Hynix joint venture, a manufacturing facility in Wuxi, Jiangsu Province.

The US$2 billion project with South Korea's Hynix Semiconductor is expected to be completed this year and become one of the largest and most advanced wafer fab factories in the country.

Krysiak said, "These investments are for long-term strategic purposes."

To maintain its leading position in China's rapidly growing IC market, ST also aims to establish new partnerships and alliances with major players in China.

"ST is keen on partnering with fast-growing electronics companies in China,"Krysiak said.

But he declined to disclose which Chinese companies are in talks with ST for partnership deals.

An earlier report by investment banking firm Piper Jaffray indicated ST is in negotiations with Chinese silicon foundry firm Shanghai Hua Hong NEC Electronics Co Ltd about a partnership.

Strategic alliances are crucial to ST's leading position in both Chinese and global markets, said Krysiak.

ST has successfully established partnerships with Chinese local customers and institutions as well as other chipmakers.

In February, ST announced in Beijing its partnership with Freescale, another global chipmaker.

In 2004, working with a subsidiary of Shanghai Jiaotong University, ST launched Shanghai Blue Media Software Technology Co Ltd, which focuses on software technologies for digital TV.

In 2002, ST launched an IC design centre with Shenzhen Graduate School of Tsinghua University.

The number of staff at the centre will increase by 500 people in the next five years.

China's semiconductor market grew to US$40.8 billion in 2005, making it No 1 in the IC market for the first time, according to research firm IC Insights Inc.

Source: China Daily