IT thriving, but glut stifles chip makers

China's fixed-asset investment in the information technology industry grew nearly 28 percent year-on-year in the first nine months, the Ministry of Information Industry said yesterday.

But investment in telecommunications equipment and computer manufacture and semiconductor sectors dropped, due to an oversupply MII said.

 In the first nine months, China's IT fixed-asset investment was 185.18 billion yuan (US$24.7 billion), a 27.9-percent growth from a year ago.

 But the growth rate was 15.2 percentage points lower than the same period last year, according to MII.

 In that period, 2,048 new IT projects broke ground, 177 more compared with a year ago, MII said.

 "The investment trend is diversified among sectors," MII said. "The investment moved out from personal computer and semiconductor industries and the capital into the electronic component sector surged."

 The PC investment in the first nine months was 4.46 billion yuan, a 26.5- percent decrease from a year ago. Semiconductor investment dropped 16 percent year-on-year, according to MII.

 Semiconductor Manufacturing International Corp, the biggest made-to-order chip-maker in the Chinese mainland, will cut capital spending this year.

 The Shanghai-based firm posted a loss of US$25 million in the third quarter due to a drop in prices of memory chips.

 "The price drop (of memory chips) indicates an oversupply in the market as Vista-driven demand has not risen as anticipated," US-based Merrill Lynch said in a recent note.

 (Shanghai Daily November 14, 2007)