Foreign investment is pouring into the mainland's semiconductor market as chipmakers bet that increased demand from Chinese manufacturers signals a turnaround in their industry. This follows two years of negative growth in worldwide semiconductor capital and wafer-fabrication equipment spending. Some of the world's largest semiconductor suppliers are behind the renewed drive this year to establish strategic test and assembly, marketing and technical support infrastructure in China. Intel, Texas Instruments, Fairchild Semiconductor, PMC-Sierra, Infineon Technologies and Agilent Technologies have recently announced key investments, spurred by rising demand for various chips used in the manufacture of consumer electronics, telecommunications and office automation products in the mainland. 'The activity in the semiconductor industry is getting better and orders are increasing,' said Kirk Pond, Fairchild's chairman, president and chief executive. Meeting this growing demand has led Fairchild, a large supplier of power and analogue chips, to invest an initial US$200 million in Suzhou on an automated warehouse and assembly and test plant, the first phase of which was launched yesterday. Another US$200 million in funds will complete the plant in 2005. The facility of 800,000 square feet will employ 3,500 people and help Fairchild generate $1 billion in revenues from China. Intel, which posted a dominant 22 per cent market share in China last year, plans to spend US$200 million in Chengdu on its second mainland test and assembly plant. Agilent has announced its collaboration with the Fifth Electronic Research Institute of China's Ministry of Information Industry to establish the country's first chip testing development centre in Guangzhou. Meanwhile, Infineon, the world's sixth-largest semiconductor firm, has set up its China headquarters in Shanghai. Doug Brownridge, vice-president of marketing at communications chip supplier PMC-Sierra, said his company had expanded its ties with local networking equipment makers like ZTE and multinational firms such as Lucent Technologies to prepare for a revival in spending on communications infrastructure in China and Asia. 'We're seeing definite improvements in these markets,' he said, noting that organisations are ready to invest again in their communications infrastructure. A global executive survey released this month by consulting firm A?T Kearney found China's growth prospects, rising disposable incomes, accession to the World Trade Organisation, and vast low-cost, educated labour pool are driving high investor confidence across a broad range of sectors, from manufacturing to services. Mr Pond noted that the industry's optimism had been helped by the normally busy period around August, when manufacturers move to get products ready for the fourth-quarter buying season. 'But before the industry declares a recovery, we'll wait until November or December and see how the products that we've supplied are selling,' he said. Research firm iSuppli has forecast demand in China to make up more than half of the global increase in demand for semiconductors between last year and 2006. It also projected the Chinese market would triple in size over the next four years and be worth more than US$80 billion by 2007. A recent Global Sources report estimated that imported chip technology is expected to account for 84 per cent of the integrated circuit demand in China this year. The worldwide market is forecast to reach US$173 billion this year, up 11.2 per cent over last year, according to market analyst firm Gartner.