TSMC seeks approval for first China factory

Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電) asked the Taiwan government for permission to invest US$898 million in its first computer-chip factory in China.

Of the amount, US$842 million will be used for the purchase, transportation and installation of machinery and equipment, the company said in a statement. The new factory will start production within four years, it added.

TSMC said production presence in China is important in attracting customers in the largest market for semiconductors. The company said it plans to build an eight-inch fab with a target monthly capacity of 35,000 wafers. The world's largest supplier of made-to-order chips said sales in August rose by half from a year ago.

Sales rose to NT$13.5 billion (US$395 million) last month from NT$9 billion in the same period a year ago.

While last year August sales rose by 5 percent from July, they were unchanged this year.

A recovery in demand is flagging, the company said in July.

TSMC's capacity use, which rose to 85 percent in the second quarter, will be in the low 70 percent range because of fewer orders from makers of computers and electronic games, the company said.

The rate of growth is declining, reflecting the fact that demand for personal computers remains weak after falling last year for the first time since 1985.

Sales soar

TSMC's sales rose 84 percent in June from the same period a year earlier. The rate of increase fell to 57 percent the next month.

Market research company International Data Corp revised its forecast for personal-computer demand this year, saying shipments will rise 1.1 percent this year to 135.5 million, instead of a 4.7 percent gain estimated in June.

The average selling price of TSMC's chips in the third quarter will fall 5 percent from the second quarter, the company said in July, reiterating that full-year sales will increase by 30 percent from a year earlier.

Sliding demand for computer-related chips may be countered by sales of chips for consumer and communications products such as DVD players, mobile phones, digital cameras and wireless networks, the company said.

Computer-related chips accounted for 45 percent of TSMC's second-quarter sales, down from 56 percent in the first quarter.

Meanwhile, United Microelectronics Corp (聯電), the world's second-largest supplier of made-to-order chips, said sales in August rose 64 percent from a year ago to NT$6.4 billion (US$187 million).

Sales were NT$3.9 billion in the same period a year ago. The company's August sales fell compared with NT$6.7 billion in the previous month.