China is in the very early stages of developing their own electronics industry. I wouldn't say that anybody should be shaking in their boots," said Engibous, speaking on the sidelines of Taiwan's Computex, Asia's largest computer-oriented trade show. China is really just a large market for products today but a very large direct competitor down the road."

In the short-term, China will remain as one of the top spots for labor-intensive tasks, he said, such as system assembly, where it can leverage low wages. IC packaging, for instance, is already an area where multinationals are haggling for capacity in order to help meet local content rules issued by China. An IC that is packaged in China is often considered made in China, a loophole that is helping drive the early development of packagers like Amkor, ChiPac and some low-key Taiwan-China joint ventures.

Over the next few years, Engibous said China will also emerge as a more reliable source of semiconductor foundries for TI. So far, the IC maker has ruled out the possibility of building its own fab there, which is similar thinking to its peers, such as Intel Corp, Samsung and STMicroelectronics.

"Investing in a major wafer fab in China would not buy Texas Instruments anything right now, Engibous said. Export controls in the US would not allow us to build a 130nm or 90nm wafer fab and for that reason it's not economically reasonable to build a non-leading edge wafer fab."

Until that changes, he suggested it's unlikely that multinationals will build fabs in China nor will the country be able to sustain another boom in fab building that it has seen during the past five years. But the time will come when it's an area where it is probably very desirable to build wafer fabs,"he said.

Engibous also asserted that Taiwan will continue to exert influence in all parts of the electronics food chain, from semiconductor and system design to manufacturing, and would not be easily eclipsed by the rise of China.

Recalling a previous trip to China, during which he attended a reception with government officials and 40-50 domestic electronics manufacturers, he noted that the Chinese firms were mostly run by Taiwanese. All but two of the CEOs were Taiwanese," he said. "That's when I learned very quickly that the electronics market over there is heavily influenced by companies here and I don't think that will change."

By: DocMemory
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