Peking University has recently patented the country's first 32-bit and 16-bit microprocessors.

Business insiders forecast that the research achievements will soon become concrete products.

Microprocessors, or computer chips, are the brains of all electronic products like computers, mobile phones, DVD (digital video discs) players and even washing machines.

Although small in size, chips play a critical role in the IT industry.

Although China has become a major international player in home appliances and computer hardware fields, the country does not produce its own core technology. Almost all the chips used in manufacturing are imported from other countries.

China's electronics industry has therefore long been described as a huge assembly factory.

But this reputation will soon end as the achievements of Peking University will soon become real products.

Beijing and Shanghai have recently set up chip production bases with initial investments of US$10 billion and US$1.63 billion respectively.

The two bases will both have a production capacity of around 40,000 chips per month by 2002.

China's chip imports reached US$7.5 billion in 1999 and the number is thought to have surpassed US$10 billion in 2000.

As the most advanced country in chip technology, the United States is the major supplier of the Chinese IT industry.

"China will become the third largest chip market in the coming two years and become No 2 within 10 years," forecast George Scalise, president of Semiconductor Industry Association of the United States.

Compared with the fully developed US market, the rapidly growing Chinese market is more attractive.

"Semiconductors will be an inflation deflator as the prices keep dropping at an annual rate of 30 per cent," said Scalise.

"The semiconductors' falling prices will reduce inflation and act as a major driver of the economy," he said.

China should further increase investment and research to ensure the sustainable growth of the industry, said Xie Xiaoxia, a researcher with the Chinese Academy of Social Sciences.

"An industry with core technology controlled by others will be unhealthy," warned Xie.

(China Daily 02/05/2001)