Texas Instruments has no plans to set up chip fabrication plants on the mainland for its semiconductors which go into mobile phones.
The world's fourth-largest chipmaker with US$6.9 billion in sales last year said yesterday China was becoming increasingly important to the electronics manufacturing industry but there was no compelling reason for it to manufacture its chips in the country.
Chairman and chief executive Tom Engibous said Texas Instruments sub-contracted some of its production to Shanghai-based Semiconductor Manufacturing International Corp (SMIC), which he described as a 'very good source of wafers'.
Chips made within China receive favourable treatment, compared with imports, such as breaks on the value-added tax.
To take advantage of the benefit, it would make more economic sense to outsource to companies such as SMIC rather than spending money to set up a new manufacturing facility in China.
At the same time, foreign companies such as Texas Instruments are prevented by the Wassenaar Arrangement from establishing state-of-the-art fabrication facilities in China.