EngagingChina

There's finally a light at the end of the tunnel, claims SMIC, China's largest contract chip maker, as China's electronics sector starts to buy more chips.

Six months ago, its immediate future looked cloudy and SMIC postponed investment plans. Today, SMIC is in more bullish mood and CEO Richard Chang told Reuters that it has recently seen a clear rise in orders while its first-quarter capacity utilisation rate is likely to substantially exceed its original expectations.

Chang's comments followed last week's upward revision in sales and margin forecasts from Taiwan's TSMC, with which SMIC likes to be compared. TSMC said the boom was due to rush orders from China, indicating that the trend of falling sales that began six months ago had turned.

Chang added that the start of production at SMIC's new fab in Shenzhen, which will use 300-mm wafers, was likely to be delayed until the first quarter of 2010 from the fourth quarter of 2009 due to problems at the construction site.

SMIC has been searching for outside investors to shore up its cash position and has been in recent talks to sell a strategic stake to Intel Corp

Last month, the company posted a Q4 net loss of $124m, double that of a year earlier, and a 31% drop in revenue.

After a decade of investment, the jury is still out on whether the Chinese government's ambitious dream of building SMIC into a world-class chip maker is any closer to being realised.

Technorati : SMIC, TSMC, china, electronics, semiconductors

US engineering giant GE and SGS-CSTC, a Chinese JV of Switzerland's SGS group, have opened an application centre in Shanghai specialised in non-destructive testing.

Non-destructive testing plays an important role in quality control in China, specifically in welding and industrial parts, and the safety assurance of pressure vessels and pipelines. NDT is used in a wide range of industries, including metallurgy, oil & gas, power generation, aerospace and transportation.

As EngagingChina has commented in the past, China's manufacturing sector is only now waking up to the need to take QA seriously and so there are big opportunities in NDT as well as in other areas of quality control.

“This venture is a strong representation of the cooperation between the two companies,” says Charlene Begley, President & CEO of GE Enterprise Solutions. “The application centre provides GE's Chinese industrial customers with the opportunity to explore advanced NDT technologies, solutions and services.”

SGS Group, the world's biggest inspection, verification, testing and certification company, offers NDT services in China while GE Sensing & Inspection Technologies, part of GE, is the world's leading manufacturer of NDT inspection equipment.

The jointly owned application centre is located in Kongqiao Industrial Zone in Pudong New Area of Shanghai, and is equipped with NDT inspection equipment supplied by GE Sensing & Inspection Technologies.

Technorati : china, manufacturing, quality control

Not even China can work up enough enthusiasm to buy bankrupt European chip maker Qimonda. The chip business is notoriously tough and Qimonda, which made commodity memory chips, had neither the scale or the technology to appeal to potential buyers.

HK-listed computer maker Inspur International is the latest suitor to say no but what is surprising is that it was interested in the first place. The days when computer companies felt they needed to also make chips ended two decades ago and since then hardware firms have banged the drum of specialisation rather than vertical integration.

Clearly Chinese companies with global ambitions have learnt a lesson from their recent past and now want to first look under the hood before asking the price on distressed western companies.

Despite its daft name, Qimonda has a rich industrial heritage as it used to be part of Germany's Infineon, which in turn used to be part of Siemens. At its height Qimonda employed 13,500 worldwide and had six major R&D facilities. But the tumbling price of Dram chips combined with the millstone of producing chips in high-cost Germany led to big losses and it filed for insolvency earlier this year. If no buyer can be found, production at its main Dresden facility stops at the end of this month.

Inspur claims to be mainland China's largest integrated IT company making both hardware and software for businesses. In 2004, it achieved a rare triumph by producing a system that beat better-known western and Japanese rivals on the TCP-H benchmark — which measures how fast computers process transactions.

Technorati : Germany, china, computers, semiconductors, software

Who said private equity was dead? Ping An Ping An Insurance, China's second largest insurer , plans to launch a PE arm this year.

Ping An Capital, initially capitalised at 20bn yuan will aim to raise more than 5bn yuan in its first private equity fund to invest in unlisted companies, corporate bonds, infrastructure projects such as bridges and ports, and real estate projects, according to China Daily.

Private equity is still a relatively novel means of financing in China but the government has has been encouraging PE investment as an additional source of corporate funding, as banks become cautious in lending to the private sector. In addition, the tumbling stock markets have dampened investors enthusiasm for IPOs. Technorati : IPO, Ping An, china, insurance, investment, private equity

China argues that western nations must share some of the blame for China's growing carbon footprint and so they should also share in the solution. It is startlingly progressive proposal for a nation that is frequently accused of having its head in the sand when it comes to global warning.

But I suspect China was simply floating a trial balloon as it knows that the grave economic ills currently facing many of China's export markets in the west mean that the proposal is politically a non-starter, unfortunately.

A leading Chinese official met with members of the Obama administration on Monday to argue that countries importing goods from China should be responsible for cutting the greenhouse gases generated by their production.

Li Gao, China's chief climate negotiator, said China wants to put responsibility for dealing with these emissions on more developed countries as part of any new international agreement to curb emissions blamed for global warming.

China has surpassed the US as the largest emitter of greenhouse gases and round 15-25% of China's emissions come as a result of manufacturing goods for export, Gao said.

EngagingChina sees similarities between this line of argument and the litany of Chinese product recall stories that regularly pop up in the western media. It is deplorable that unscrupulous manufacturers in China adulterate baby milk or forge auto parts. But it is also disingenuous for buyers in the west to pin the blame entirely on China.

You get what you pay for, and if the west really wants China to invest in QA and perform rigorous safety checks then buyers in the west must police Chinese suppliers better and accept that better quality will add to the price of Chinese-sourced goods

In similar vein, companies in the west are falling over themselves to boost and boast their green credentials — turning off computers, turning down heating, encouraging car pools, etc. But they conveniently overlook the environmental footprints of their low-cost suppliers in China and the hundreds of tons of CO₂ spent shipping T-shirts or laptops halfway around the world.

The Chinese proposal is an imaginative one but its a tough sell particularly a time when many western competitors, with presumably higher environmental standards to their Chinese rivals, are having to lay off workers.

Nevertheless, there is nothing to stop the more progressive western businesses embracing the spirit of the Chinese proposal by offsetting the carbon footprint of their Chinese suppliers. That gives them something to boast about in the annual report and also allows the growing number of green consumers to sleep more soundly at night.

More on China's ballooning carbon footprint in these stories.

Technorati : US, carbon credits, china, environment, government, manufacturing, pollution