TSMC Awaits Phase II Approval from Taiwan for
Shanghai Chip Foundry
Taiwan Semiconductor Manufacturing Co (TSMC), Taiwan's
largest chip foundry, is now awaiting Phase II approval
from the Taiwan government so that it can build an 8-inch,
0.25 micron fab in Shanghai. This is according to Morris
Chang, chairman of the foundry giant. He predicted that
TSMC would begin manufacturing by the end of 2004.
The 8-inch wafer, 0.25 micron technology is not the latest;
the latest is 12-inch wafer, 0.13 micron technology.
The chip foundry business is driven by two factors: very
high capital investment, since each fab costs US$1-2 billion
to set up, and fast technology advances. This means that
each fab has to squeeze as many orders and as much output
as possible in a short time to reach profit, before the
technology is replaced by newer equipment.
TSMC has already won
approval from the Shanghai municipal government, which
is anxious to build Shanghai into the world's largest
electronics manufacturing center. Some predictions state
that China will
overtake Europe by 2005.
Since TSMC is the world's largest chip fab, the Taiwan
government has been very sensitive about allowing it to
set up manufacturing in China, since the Taiwan and Chinese
governments are hostile to each other. The Taiwan government
has already given "Phase I approval", which
means that TSMC is allowed "in principle" to
invest in China. Phase II approval is much more specific,
allowing export of equipment from Taiwan to China for
setting up manufacture.
The issue is very touchy for the Taiwan government, because
once the TSMC project is approved, all other chip foundries
in Taiwan will likely quickly follow, and it will be virtually
impossible to stop the flood of investment into China.
For this reason, the issue has become a hotly-debated
item in Taiwan's legislature. With Taiwan's presidential
elections coming up in March of next year, it has become
even more sensitive, with most politicians forced to take
a stand on the issue.
TSMC has mainly functioned as an application-specific
integrated circuit (ASIC) chip foundry, making communications,
gaming and other specialty chips. Recently, it has moved
into making CPU chips for companies such as Transmeta,
a designer of low-power consumption CPUs. United Microelectronics,
TSMC's main competitor, is the partner manufacturer for
AMD,
Intel's main competitor for computer CPUs.
Intel does
not outsource its manufacturing.
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