In what seems a clear vote of confidence in China's hi-tech skills, US chip manufacturer Anadigics is to build a new fab in Kunshan, Jiangsu province.
The move is unusual because Anadigics specialises in making complex chips out of gallium arsenide, a semiconductor that is not so well known as silicon but has particular advantages for high-frequency radio applications like cellular communications and broadband wireless.
Most leading manufacturers of GaAs chips are located in the US and the market for GaAs devices does not suffer the cut-throat competition or boom-to-bust economics that affects many silicon device manufacturers.
Anadigics was one of the first to use 6-inch wafers to make its GaAs chips at its fab in New Jersey and the prescient move allowed it to get higher operating margins than the competition.
Things are obviously looking up for Anadigics as it now needs a second 6-inch facility and this time it has, surprisingly, chosen to build the fab in China, in Kunshan New and Hi-Tech Industrial Development Zone (KSND). Today, local dignitaries and Anadigics officials broke ground on the fab (picture), whose construction is due to be completed next year.
GaAs semiconductors were once limited to niche applications such as defence and microwave communications, but the growth in wireless and wireline broadband services has pushed this technology into the mainstream.
Indeed, one of its latest customers is China's Huawei, which is using an Anadigics power amplifier chip in its U120 music-optimised handset (pictured right). While Huawei's handset business is not well known outside of China, the company is a leading supplier in China's domestic market.
The rapid rise of China's handset industry has clearly swayed Anadigics to set up its foreign fab in mainland China rather than in Europe, Korea or Taiwan, where it already has offices.