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TSMC gets Taiwan government resolution on China Fab investment
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Thursday, January 23, 2003
After waiting four months to get a green light from the Taiwan government for its plans to establish a wafer fab in China, Taiwan Semiconductor Manufacturing Co. Ltd. received an amber light today, pending the provision of further information.
According to Lin Yi-fu, Minister of Economic Affairs, TSMC must provide additional information, specifically on how it will raise and use the $898 million earmarked for the project. Currently, TSMC's plan for the 200mm wafer facility includes a $371 million transfer from Taiwan and $418 million in borrowing on the mainland.
"We've in principle approved TSMC's plan to invest in a wafer plant in China," the minister told reporters in Taipei following a meeting with other government officials. "A final authorization will be given by the Executive Yuan," or the cabinet, when the information to be provided proves sufficient.
The approval not only allowed TSMC, the biggest pure-play foundry worldwide, to set a foothold in the fast-growing Chinese market, but to become Taiwan's first chipmaker to build plants on mainland China in more than 50 years.
TSMC welcomed the news. "We're delighted to see the government has granted the approval," said Jesse Chou, a spokesman for TSMC, Hsinchu, Taiwan. "We'll fully cooperate and submit the information as soon as possible."
TSMC and rival United Microelectronics Corp. will be playing catch-up in the Chinese market, where foundry service providers such as Semiconductor Manufacturing International Corp., Shanghai, China, have emerged as competition. TSMC and UMC -- which also has expressed an interest in setting up wafer facilities in China -- are feeling increasing pressure from SMIC as it lowers prices to lure orders and fill up its production lines, some analysts said.
"The approval has a positive impact on the future of TSMC," said Rick Hsu, a senior analyst at Nomura Securities in Taipei. "Although no revenues will be generated immediately for TSMC, the approval will still benefit TSMC and help it seize the huge opportunities on the mainland."
China has become one of the world's top three markets for personal computers and cellular phones, drawing Intel Corp., Motorola Inc., NEC Corp. and many other companies to establish plants there, said some analysts.
TSMC first filed an application for the high-profile investment last September. Since then, the government had put off a review on the plan amid concerns that China will have access to the advanced process technologies owned by Taiwan's chipmakers, analysts said.
TSMC's planned facility would be located in the Songjiang industrial park near Shanghai. Once the Taiwan government gives a final permission, the foundry will move existing 200mm wafer manufacturing equipment to Shanghai from Taiwan, said the spokesman.
By: DocMemory
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