Representing the company's biggest investment so far in China, zone officials see the project as a boon to Shanghai, which is looking to set up a 22-square-kilometre integrated circuit (IC) production belt in the Pudong New Area.

The new foundry will be capable of turning out US$340 million worth of products annually after its first-phase construction is finished in 2002, the WFTZ sources said.

"We chose Waigaoqiao as a location for the factory because we can access the global market more easily via the free trade zone,'' said Frances Zhang, an executive with IBM Engineering Technology (Shanghai) Co Ltd.

Besides the IBM project, Waigaoqiao has confirmed that another chip sealing and packaging project will be ushered in soon, involving US-based Amco, with a total investment of US$60 million.

Negotiations to bring a major Taiwan-based enterprise into the zone are also under way, the sources said.

"Waigaoqiao is expected to become a primary host location for quite a few enterprises engaged in IC sealing, packaging, testing and related logistics,'' said Fan Shuming, the zone's senior official.

Planned for the Zhangjiang High Tech Park in the heart of Pudong, the chip belt will extend north along Shenjiang Road, cross the Jinqiao Export and Processing Zone and into Waigaoqiao.

According to the city's 10th Five-Year Plan (2001-05), more than 10 IC production lines will be located in the belt. The city is hoping to lure 200 companies and US$10 billion in investment into the belt, which they say will include everything from chip design and assembly to packaging and testing.

(China Daily 03/21/01)