Taiwan Semiconductor Manufacturing Co Ltd said it plans to set up its first advanced manufacturing plant in China with a $3 billion investment, highlighting the growing importance of the Chinese market for semiconductor giants.

The move by TSMC to build a wholly-owned plant that will make 12-inch wafers - which denotes the size of the silicon that chips are cut from - was expected after Taiwan authorities in September relaxed rules that had mandated such investments in China be done under joint venture terms.

It underscores how TSMC, the world's largest contract chipmaker, aims to go it alone to protect its technological lead, even as rivals, namely from China, are busy snapping up smaller players.

TSMC had urged authorities to allow such facilities, which would use more advanced technology processes than 8-inch wafer plants, to be wholly owned out of concern for intellectual property protection. TSMC already has a wholly-owned 8-inch chipmaking plant near Shanghai.

TSMC said Monday its latest investment will allow it to expand its business opportunities in China.

"It is a market that every semiconductor company must pay close attention to when considering its global strategy," TSMC said in a statement.

The entire investment project is worth $3 billion, but the capital investment will be lower than that due in part to favorable Chinese policies aimed at developing its chip industry, TSMC said.

Located in Nanjing, China, the planned capacity of the new plant will be 20,000 12-inch wafers per month and includes the construction of a design service center, TSMC said. Production will begin in the second half of 2018, it said.

China views self-ruled Taiwan as a renegade province and has not ruled out the use of force to bring it under its control, although relations have improved in recent years

Taiwan has restricted manufacturing activities of its prized semiconductor sector in China, amid political tension between the neighbors. However, competition from China's fast-growing, though fledgling chip industry has put pressure on Taiwanese companies to widen their mainland footprint.

By: DocMemory
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