LACKING a well-developed infrastructure, China is missing out on the trend by foreign chip-makers to shift design and production to local markets, says Keh-Shew Lu, Texas Instruments Asia president. ''China simply cannot support the high level of controlled conditions needed in wafer fabrication,'' he said. Texas Instruments has invested US$2.9 billion in Asian operations, including joint ventures which have a projected total investment of $4.1 billion by 2000. Mr Lu said wafer-making depended on exact conditions and pure chemicals, which could only come from a sophisticated infrastructure. ''The problem in China is every province is setting up wafer fabrication. The government needs to assign an industry area. Concentration of industry will build up a strong infrastructure,'' said Mr Lu. Sin Chou Science Park, which was set up by the Taiwanese Government, is the production site of a number of chip-makers, including Texas Instruments. Until a few years ago, most companies imported their own designs to production sites, he said. As the education level in production countries rose, companies could design and produce at the same location because local designers knew the market, Mr Lu said. That had all helped to improve customer satisfaction, he said. ''Back-end production, the packaging and assembly, does not require that high level. ''That is how Taiwan started attracting production 15 years ago and that is how China can start,'' he said. Texas Instruments had an operating profit of $69 million in the first quarter of 1994 against $22 million in the same period last year.