Malaysia's largest listed chipmaker is expected to shift manufacturing of its lower-end products to China, in a move likely to be followed by other chipmakers, a report said today.

Malaysian Pacific Industries Bhd (MPI) has recently completed a groundbreaking ceremony for its plant in Shanghai, expected to be operational in September, an industry source told the New Straits Times .

It plans to transfer nine mobile phone integrated circuit package lines to Shanghai but production of higher-end products will be continued in Malaysia, the source said.

Three-year plan

It is expected to invest an initial US$5 million in its China operations which will help cut costs by 10 to 15 percent, sources said.

The move is part of a three-year plan to counter rising competition from cheaper locations for lower-end products and boost exports, the newspaper said.

MPI's officials were not immediately available to comment.

Other chipmakers are expected to follow MPI's lead to gain market share, diversify products and service clients that have relocated their operations to China, the daily said.

Another Malaysian firm, Globetronics Technology Bhd, in March announced plans to set up operations in China to test and assemble integrated circuits, it added. AFP