Taiwan Semiconductor to Build Chip Plant in China
December 07 2015 - 11:30AM
Dow Jones News
Taiwan Semiconductor Manufacturing Co., plans to build a $3
billion advanced chip plant in China, as the world's largest chip
maker by revenue bets that cost advantages outweigh any potential
competitive threat.
The move to build a fabrication plant in the eastern Chinese
city of Nanjing comes as Taiwan debates the role of the mainland
for its chip makers, a flagship industry for the island. Taiwan's
government restricts its chip makers' manufacturing activities in
China due to concerns that its larger neighbor will eventually gain
the know-how to build a competing chip industry of its own.
Already, China has moved to bulk up its chip industry, which it
sees as essential to moving up the value chain of products it makes
as well as securing a safe domestic source of components. Its chip
makers have moved to consolidate and to look for deals abroad.
Still, Taiwanese chip makers have advocated for freer
cross-strait investment for their industry, arguing it is necessary
for them to stay cost competitive against Chinese rivals. TSMC's
proposed factory was expected after Taiwan loosened regulations
this year.
TSMC is one of several major semiconductor companies that have
announced new investments in China this year. But while some
international chip makers have struck joint ventures with Chinese
companies, TSMC's new plant will be wholly owned, as the company
seeks to maintain its technology edge over its Chinese
counterparts.
TSMC said Monday it had submitted an application to Taiwan's
Ministry of Economic Affairs to build a wholly owned manufacturing
facility for 12-inch wafers and a design-service center in Nanjing.
Thin slices of silicon, or wafers, are a key part of chip
manufacturing, with wafers of larger diameter better but harder to
make.
Taiwan announced over the summer it would allow its companies to
open this specific kind of chip factory in China. The company
expects production to start in the second half of 2018.
The entire project's investment is valued at $3 billion, but the
actual capital investment will be less than that, TSMC said.
TSMC already has a less-advanced eight-inch wafer plant in
China.
Qualcomm Corp. announced in June it would form a joint venture
with TSMC's main Chinese rival Semiconductor Manufacturing
International Corp. to help it make more advanced chips.
Intel Corp. said in October it would spend as much as $5.5
billion to convert its semiconductor fabrication plant in Dalian,
China, to make "leading-edge" memory chips.
Experts say that despite the growing ties between foreign and
Chinese chip makers, China's capabilities still remain well behind
the rest of the industry.
Write to Eva Dou at eva.dou@wsj.com and Chester Yung at
chester.yung@wsj.com
(END) Dow Jones Newswires
December 07, 2015 11:15 ET (16:15 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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