Motorola boosts China investment

Motorola: Sowing for future success?

Motorola is to spend $6.6bn (£4.5bn; 7.3bn euros) over the next five years in a bid to double the output of its Chinese subsidiary.

The aggressive investment in China is at odds with Motorola¿s recent global performance.

Hurt by falling demand for mobile telephones and semiconductors, Motorola lost $153m during July, August and September, and is expected to post its first full-year loss in 45 years.

So far this year, the company has axed 32,000 jobs, or 26% of its entire workforce.

China boom forecast

The Chinese expansion is designed to cash in on an anticipated boom in demand for telecommunications equipment in China.

"It's an important market. We just have enormous opportunities in broadband, in wireless and in the internet," said a Motorola spokesperson.

The company has spent $3.4bn in China since 1992, when it set up its first Chinese facility.

Motorola is the latest in a long line of western multinationals to step up investment in China ahead of the country's entry to the World Trade Organisation.

According to China's Ministry of Foreign Trade, foreign direct investment in China has soared by over 20% to $32.3bn in the first nine months of the year.

Last week, German Chancellor Gerhard Schroeder led a trade mission to China which generated investment deals worth an estimated $10bn.

China output to double

Motorola said it plans to build "at least" another 10 semi-conductor wafer fabrication plants in China.

The company aims to double its Chinese subsidiary's annual output to $10bn by 2006.

World demand for semiconductors, which is highly cyclical, is predicted to fall by as much as 25% this year.

But a recovery is forecast in 2002 and 2003.