Microchip Technology plans to increase annual sales in the mainland to US$500 million in six years, fuelled by rising demand from key mainland manufacturing sectors. This was disclosed by Microchip chairman and chief executive Steve Sanghi, who said the mainland would become the Arizona-based firm's biggest market for micro controllers by 2009. 'That means we need to achieve a growth rate of about 35 per cent a year in China,' he said. 'We have grown by more than 45 per cent annually in the past three years, which puts us well on track.' It would still be a big jump for Microchip, after generating about US$80 million in revenues from the mainland in the year to March 31. Mr Sanghi attributed the company's optimistic forecast to a steady increase in sales of its microcontroller and analogue chip to manufacturers in the mainland's consumer electronics, office automation, industrial and telecommunications sectors. Microcontrollers are expected to continue to make up most of that demand. These chips (each combines a microprocessor, some memory and other functions on a single integrated circuit) have a range of uses, from simple appliance-control tasks to high-speed real-time machine control and data collection. 'You can find three to five of our microcontrollers embedded in a laptop computer,' said Larry Ross, Microchip vice-president and managing director for Asia-Pacific sales. Officials said rising global exports and domestic consumption of China-manufactured personal computers, televisions, cellular phones, electronic toys, home appliances, meters, gas pumps, smoke detectors and vehicle products would ensure Microchip met its sales target. 'The rapid development of the electronics manufacturing industry in China has led to an ever-increasing demand for semiconductors and associated passive components,' said Dorothy Lai, principal analyst at research firm Gartner in Hong Kong. 'More than 90 per cent of China's domestic semiconductor demand is still met by foreign suppliers, particularly the more sophisticated devices such as microprocessing units and digital signal processors.' Estimates from Gartner's Dataquest unit show that total electronics equipment production revenue in China will reach US$200 billion in 2007 from US$125 billion last year. Moreover, the mainland's share of the Asia-Pacific electronics equipment production market is forecast to hit 42 per cent in 2007 from 38 per cent last year. Microchip is expected to benefit under that market scenario, despite stiff competition from Motorola and ST Microelectronics. Mr Sanghi said the company had a network of eight offices in the mainland, including sales and support facilities in Hong Kong, Shenzhen, Shanghai and Beijing. The company has 11 key distributors and three design houses spread across the country. Gartner Dataquest's latest worldwide microcontroller market share figures also rank Microchip as No?1, ahead of perennial market leader Motorola. It has been a long journey to the top for Microchip, which saw global unit shipments of its PIC microcontroller line increase 30 per cent last year amid a lingering economic slowdown. 'The gains in market share we achieved last year reflect the strength of our brand name and the broad product offering that supports our customers,' Mr Sanghi said. 'Leading engineers worldwide continue to use the PIC microcontroller architecture because we provide a competitive advantage to their own businesses, with faster time to market, lower total system cost, and low-risk product development.' Microchip started at 20th place in worldwide unit shipments in 1990 and climbed steadily to reach second place in 1997 to 2001. The Nasdaq-listed firm, which serves more than 40,000 manufac<243>turing customers worldwide, saw global revenues rise 14 per cent to US$651.5 million in the year to March 31. Mr Sanghi said Microchip would decide in the next six months on the location for a new test and assembly plant in Asia. Microchip has test and assembly plants in Bangkok and Shanghai. China is the main contender for the new plant, which will cost from US$50 million to US$70 million to build. Meanwhile, concerns about the possibility of another outbreak of Sars in the mainland have led Mr Sanghi to consider other sites, including the Philippines, Thailand and Vietnam. 'We need to build a new test and assembly plant in the region so that we can meet our future supply requirements,' Mr Sanghi said.