Thursday, February 27, 2003
The Taiwan government has approved the first-phase plan of Taiwan Semiconductor Manufacturing Co. Ltd. to build a 200mm wafer facility in mainland China.
TSMC has been allowed to transfer $50 million out of Taiwan for the investment, the Ministry of Economic Affairs said today. The amount represents about 6% of the total investment on the project by TSMC, the largest foundry service provider worldwide.
"TSMC can now legally begin the preparation work to build a fab in China," vice minister Shih Yen-shiang told reporters.
This is the first time the Taiwan government has allowed such a facility to be built in China by a Taiwanese company. Taiwan and China have been politically separated since a civil war divided the island from the mainland over 50 years ago.
Today's official approval comes one month after Hsinchu-based TSMC received a conditional endorsement to set up the plant near Shanghai, where many international IDMs (integrated device manufacturers) have production bases, attracted to the advantages of the mainland's low costs and vast market.
So far the government has only green-lighted the preliminary stage of the investment, however, and TSMC must meet additional requirements in the future. The vice minister said that before TSMC can move its existing manufacturing equipment to China for the project, the company needs to reach an "economic scale for 300mm wafer production in Taiwan," and receive a second-phase approval.
TSMC chairman Morris Chang told investors in January that he expects the plant in Shanghai to start mass production in the fourth quarter of 2004. But some analysts said the wait might turn into good timing for TSMC, as current demand in the Chinese market is mostly for the lower-end 0.35 micron and 0.5 micron process technologies. The most profitable technologies for TSMC are 0.18 micron and below, for which demand in China might improve by the time the fab is completed, analysts said.
TSMC has said it is planning to spend $898 million on the investment.
By: DocMemory
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