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Applied Materials has signed a major deal with Chinese semiconductor company Semiconductor Manufacturing International Corporation to supply its systems developed at its Rehovot facility, Applied Materials said Wednesday.
"The deal is a milestone for both the company and the hi-tech industry in Israel," said Gilad Almog, chief executive officer of Applied Materials Israel. "China is currently the largest combined circuits market in the world bigger even than the US and Japan."
Market sources estimate the deal is valued at NIS 500 millioon.
Almog signed the agreement with SMIC president Richard Ru Chang during Chang's visit to Israel this week as part of one of the highest level Chinese business delegations ever to visit the country.
"The agreement with SMIC establishes Applied Israel as a central player in this strategic market opening a major opportunity for us to grow there," Almog said.
He added that the annual turnover of the Chinese market is approximately $41 billion and is forecast to grow to $124b. by the end of the decade.
The SMIC deal is the largest Applied Materials has signed since starting its operation in Israel 10 years ago.
SMIC is China's largest producer of foundry integrated circuits and the third largest in the world, with eight production facilities where it manufactures for clients including Toshiba, Fujitsu and a number of Israeli companies.
Separately, Saifun Semiconductors Ltd. said SMIC would use its technology to make an advanced data flash chip that will go on sale in 2008. Semiconductor Manufacturing, which already makes chips using Saifun technology, "aims to provide a comprehensive flash product offering to tap into the emerging consumer electronics market in China and throughout the world," Saifun said Wednesday.
"The Israeli hi-tech industry is characterized by a high level of development and quality production using advanced systems," said SMIC president Richard Ru Chang. "The systems that Applied Materials is using will enable SMIC to develop a new generation of IC chips using 65 nanometer technology, for the world market."
Eleven presidents and chief executive officers are participating in the Chinese delegation as guests of the Ministry of Industry, Trade and Labor during which they will meet with potential Israeli partners in their respective sectors.
The group arrived in the country as part of the visit of Chinese politician Liu Qi, president of the Beijing 2008 Olympic organizing committee. Also in the delegation is the deputy mayor of Beijing Lu Hao, who is responsible for development projects in the city including those for the Olympics.
Some of the companies represented include electronics company BOE Technology Group, telecommunications concern Datatang Telecom Technology, the Bank of China, Beijing Construction Engineering and the Beijing Uni-Construction Group.
In addition to the production agreement, Applied Materials and SMIC are scheduled to sign a bilateral cooperation agreement later today, as are Datatang and Israeli company Comsys IT Partner International and Beijing Aisenlubao Oil and Fat Co and Zeta Olive Oil Industrial.
Trade between Israel and China is expected to grow 24% this year after falling 4% last year, the Ministry of Industry, Trade and Labor said. Israel exported $725 million worth of goods to China in 2005 while imports reached $2.3b.