While equipment spending is generally acknowledged to be down, high-tech and the people who buy it know that it's early yet. So governments and companies alike are pouring money not into frontline equipment, but into infrastructure, R&D and education designed to foster that next wave of innovation. Smack in the middle of any such innovation, regardless of the platform, will be the semiconductor industry. The microchip market alone generates more than $150 billion per year worldwide, and it's growing rapidly.
     The semiconductor industry em-ploys 284,000 people in the U.S., 75,000 in Silicon Valley alone. In November 2000, even as the slowdown was taking hold, the Semiconductor Industry Assoc. (SIA) projected that the global chip market would exceed $200 billion in 2000 and climb to $319 billion in the next three years. Even if the PC market slows, opportunities are simultaneously opening up in networking and wireless applications, as well as optical electronics and broadband. SIA president George Scalise says the industry's concentration in the Americas and Southeast Asia will become a thing of the past, as demand and facilities spread into other quadrants.
     Yet, as reported in a February Washington Post article, perhaps no country is going after the semiconductor industry like China. NEC and Hua Hong Microelectronics Co. have built a RAM (random access memory) chip factory in Shanghai, and another foundry is coming online soon, drawing an investment of US$1.6 billion. The Post cites one Chinese authority who "envisions the construction of at least 40 major chip-production lines -- about half in Zhangjiang -- within the next 10 years." Various incentives have drawn planned projects from firms like Motorola ($1.9 billion for a plant in Tianjin) and Shougang Group and its consortium of investors ($1.3 billion for a project in Beijing). Chip firms valued at more than $100 million receive a five-year tax exemption, and a 50 percent discount on taxes for five years after that. Shanghai alone will pony up $800 million in tax breaks for the industry, according to the report. U.S. trade restrictions with China, however, have slowed investment thus far.