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TSMC gains approval to set up 12-inch wafer plant in China

TSMC gains approval to set up 12-inch wafer plant in China

Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the world's largest contract chip maker, has obtained approval from the Taiwan government to build a 12-inch wafer plant in China, the Investment Commission said Wednesday.

The commission issued the greenlight after a meeting to review TSMC's application, which was submitted in December, the first ever by a Taiwanese firm to set up a fully owned 12-inch wafer plant in China.

TSMC announced the investment plan after the Taiwan government in September relaxed regulations governing investments by local wafer foundry operators in the China market, allowing total investment in a maximum three 12-inch wafer plants by Taiwanese chip makers.

TSMC is planning to build the 12-inch wafer plant in Nanjing, Jiangsu Province.

On Tuesday, a TSMC board meeting approved a proposal to invest US$1 billion in the Nanjing plant by setting up a wholly owned subsidiary in the Chinese city, in anticipation of the Taiwan government's approval.

After gaining the green light Wednesday, TSMC said it will pick a lucky day to start construction of the new plant.

The company is scheduled to apply the advanced 16 nanometer process when it starts commercial operations in the second half of 2018, three years after it began mass production on that technology in Taiwan.

According to TSMC's plan, the Nanjing wafer plant will have a monthly capacity of 20,000 units, equivalent to about 2.5 percent of the company's total production capacity in 2015.

TSMC said it should be able to keep its total investments in Nanjing below US$3 billion since it will use its existing production equipment in Taiwan and take advantage of the investment incentives offered by the Chinese government.

However, before TSMC is allowed to ship equipment to China for its 12-inch wafer plant, it will be required to submit proof to the Taiwan government that it has started commercial production on the more sophisticated 10nm process at home, according to the Investment Commission.

It said this is to ensure that Taiwan maintains its lead over China in the semiconductor industry. TSMC is scheduled to launch commercial production on the 10nm process in Taiwan by the end of the year. Chang Ming-pin (張銘斌), executive secretary of the Investment Commission, said TSMC will invest NT$860 billion (US$25.44 billion) in Taiwan over the next three years and hire 2,500 to 3,500 new employees per year.

TSMC said the decision to set up a 12-inch wafer plant in China is aimed at providing services to its clients not just in China but around the world. Currently, TSMC hold more than a 50 percent share of the global contract chip making market.

With its new investment in China, TSMC is expected maintain its lead in that market over Chinese competitors such Semiconductor Manufacturing International Corp. (SMIC, 中芯) and Shanghai Huali Microelectronics Corp. (華力), according to market analysts.

They said TSMC's new plant is likely to be the best 12-inch wafer plant in China, with the most sophisticated technology.

(By Huang Chiao-wen, Jackson Chang and Frances Huang)

Updated : 2021-05-07 19:38 GMT+08:00