Rising yuan will give IT a bumpy ride
THE micro-electronics industry of China, the world’s biggest IT manufacturing region, will face a bumpy road in 2008 with the appreciation of the yuan and the rising cost of raw materials, industry insiders said during an IT show yesterday.
“The industry is currently developing at a steady and healthy pace but it will face challenges especially on exports as the yuan becomes more valuable,” Wang Bingke, vice-director of the enterprise restructuring and operation department under the Industry and Information Ministry, said at NEPCON/EMT China 2008.
The industry’s revenue for the first two months this year was 674.4 trillion yuan (US$96.34 billion), up 16.3 percent year on year.
Industry costs for the same period amounted to 580 billion yuan, which is a 16 percent increase over the same period last year.
In 2007, the micro-electronics industry’s revenue, which composed 12 percent of China’s total industry revenue, amounted to 5.6 billion yuan, an 18 percent increase over the 2006 figure, according to Wang.
Policy push
On Thursday, the yuan cracked the seven mark against the United States dollar,a record high since it was de-pegged from the US currency in 2005 at about 8.3.
A US-based Cookson Electronics representative said its China operations would not only be affected by appreciation of the yuan, but by the rising cost of raw materials.
“There’s not much we can do as a company but to hope for favorable government policies since this is an issue faced by all export-related industries,” he said.
A representative from Stadium Asia, an electronics manufacturing services provider, shared similar sentiments, saying that the entire industry faced problems with the yuan’s appreciation.
GKG Precision Machine Co, specializing in screen printer development, said it may be willing to negotiate the price of its products in order to remain competitive.
Copper price for delivery declined 0.3 percent in three months from its March 6 record of US$8,820 a ton. Prices have increase 2.6 percent this month.
The four-day NEPCON China closed yesterday after attracting more than 650 companies from a total of 22 countries and regions.