The move should help Motorola ride a wave of burgeoning demand for autos in China, and also bolster support of one its best performing divisions. The cost of the facility was not immediately disclosed, but a spokesman in Beijing said the company would provide an estimate in a few weeks, after details of the facility receive final government approval.

During the last few years, the steadily increasing purchasing power of China's emerging middle class has been a catalyst for higher auto sales. Traffic in many of China's biggest cities, such as Beijing and Shanghai, has far outstripped the capacity of roads, making daily traffic jams ¡ª and an alarming increase in fatal car accidents ¡ª a visible sign of China's rapid development.

Auto sales in China grew from 3.46 million units in 2002 to 4.10 million in 2003, a compound annual growth rate of 18.5 percent, according to Global Insight, an automotive market researcher. The researchers also believes that China will account for 25 percent of the global growth for auto sales from 2006 to 2007.

"This opportunity is a double-play for Motorola. Worldwide, we continue to see an increased demand for electronic content in vehicles, growing at a rate of about 9 percent," said Marios Zenios, senior vice president and general manager of Motorola Automotive. The growth for automotive electronics in the local Chinese car market is less than global growth, but Motorola is hoping to position itself for future adoption, and is working with local branches of multinationals such as General Motors, BMW and Volkswagon.

In its first quarter 2004 earnings, Motorola said that for the third consecutive quarter its automotive business gained "significant new and replacement" business contracts worth more than $1 billion over several years.

The new facility, which will be in Tianjin, southeast of Beijing, is expected to be built in phases. The first phase will come online in late 2004 and be about 200,000 square feet. In 2005, the facility will make engine control units, interior electronics, telematics and powertrain products. Some products for Motorola's embedded computing and energy systems businesses will eventually also be made there, including batteries for cellphones.

Last year, Motorola sold a Tianjin-based 200-mm wafer fabrication facility ¡ª MOS 17 ¡ª to Shanghai-based Semiconductor Manufacturing International Corp. in exchange for shares in the foundry. Originally conceived in the early 1990s, MOS 17 was supposed to be the centerpiece of a $1.9 billion Motorola investment in the Tianjin area and emerge as China's most advanced fab.

Low utilization rates, losses and a switch to a "fab lite" strategy prompted Motorola to sell the facility. It still owns nearby BAT-3, a semiconductor assembly and test facility, which employs 1,200 workers. A Motorola affiliate, Freescale Semiconductor, also runs a Tianjin Semiconductor Design Center.

By: DocMemory
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