ST Assembly Test Service Ltd announced yesterday it will invest US million to set up a manufacturing plant in Zhangjiang High-Tech Park in Shanghai's Pudong District.

　　The world's fourth-largest chip-testing equipment provider will transfer some equipment from its Singapore facilities to the new 2,322-square-meter plant.

　　The initial output will probably begin in October with the majority of the investment spent in 2004.

　　Zhangjiang, Shanghai's largest high-tech industrial park, is the first step in ST Assembly's expansion plan to the Chinese mainland.

　　"With this facility in Shanghai, we have begun our strategic plan to establish a significant manufacturing presence in China to engage in the indigenous Chinese foundries and design houses," said Tan Lay Koon, president and chief executive officer of ST Assembly.

　　In recent years, Shanghai's semiconductor industry has boomed. The Yangtze Delta, with Shanghai at its center, remains the "Silicon Valley" of the mainland. In total, more than US.2 billion has been invested into the city's chip sector.

　　However, generally speaking, investors have to spend 80 percent of their funding to buy fabrication and testing equipment from foreign suppliers.

　　Yin Hong, project manager for the park's developer, said the presence of ST Assembly can help turn the tide in such a situation.

　　"ST Assembly's project shows that more and more foreign firms are interested in manufacturing high-tech systems on the mainland," he said.

　　"ST Assembly is also the first Singapore semiconductor company to join our park. As we have already attracted big names from the chip industry in the US and Europe, a complete semiconductor industry chain is emerging."

　　China's semiconductor market has been one of the few bright spots in the world's chip market. Domestic sales surged 28.6 percent year-on-year to hit 147.1 billion yuan (US.7 billion) last year. Worldwide sales, in contrast, were still in the worst and longest down-turn last year when annual sales hit US billion, inching up only 1.6 percent.

　　Domestic chip sales are expected to reach 448.89 billion yuan by 2007.