BEIJING - China will invest 500 billion yuan ($77 billion) to stimulate the electronic components sector during the period of the 12th Five-Year Plan (2011-2015), according to a report published on Tuesday by the China Electronic Component Association, an organization under the Ministry of Industry and Information Technology.

The report also said that the sector's annual sales revenue is expected to reach 1.88 trillion yuan in the next five years.

To reach the predicted figure, annual sales revenue will require a growth rate of 10 percent year-on-year from 1.1 trillion yuan at the end of 2010, the report said.

Cutting-edge electronic components and research and development will be the main areas of investment, including the "Internet of things" (wireless sensor technology for connecting devices), broadband optical fibers and mobile-device components.

According to the report, locally produced electronics components will dominate 70 percent of the Chinese market, with a total output of more than 2.8 trillion units by the end of the 12th Five-Year Plan period.

"China will become the biggest market for cloud computing (using the Internet as storage space) in the near future," predicted Ni Guangnan, an academician of the Chinese Academy of Engineering. He said the demand for mobile devices will surpass that of personal computers in 2012, and will result in an increased demand for touch screens and electronic chips.

"Sales of domestic tablet PCs in China are expected to reach 4 million units by the end of this year, excluding Apple Inc's iPads," said Vincent Gu, an industry analyst from iSuppli, which provides analysis of the Internet market.

"Our company's goal is to have 40 percent year-on-year growth and reach $1 billion in sales revenue this year," said Chen Feng, chief marketing officer of Fuzhou Rockchip Electronics Co Ltd, a producer of tablet PC chips. The company holds market share of 70 percent in chip production in China and produced more than 5 million tablet PC chips last year.

"The mobile-device electronics components market is heating up and investments in the sector will become red-hot next year," Chen said.

Without disclosing figures, he said his company has invested a large amount of money to research the use of its chips by Google Inc's latest Android operating system, which can be used on tablet PCs and smartphones.

According to DisplaySearch, an information portal for the display supply chain, the market for display products will also enter a period of rapid growth this year. China's output of large display panels (LDPs) overtook Japan's in the second quarter of 2011 for the first time to become the third-largest producer of LDPs in the Asian region.

China's monthly output of LDPs totaled 3.4 million units for each month of the second quarter, compared with 2.7 million units a month in the first quarter. DisplaySearch predicted that this trend will continue through the first quarter of 2012.

China Daily

(China Daily 07/29/2011 page14)