Sat, Dec 14, 2002 - Page 10 News List

TSMC says China plan not delayed

PATIENCE The chipmaker denied media reports that the government is dragging its feet on granting it permission to invest in China, saying these things usually take a lot of time

By Bill Heaney  /  STAFF REPORTER

Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電) yesterday denied media reports that its investment plans in China have been delayed, saying the politically sensitive issue will take time to be finalized.

"Our position has been quite clear -- we filed our application and will wait for the government to make a decision," said Tseng Jin-hao (曾晉皓), a TSMC spokesman. "This is a very sensitive issue for the government, but we hope they can come to a decision soon," he said.

Tseng's comment came in response to media reports yesterday that the government was deliberately dragging its heels over granting approval for the investment plans. The reports also suggested the government had been pressuring TSMC to delay its plans.

In March, the Cabinet gave it approval to computer-chipmakers investing in China. In August, the Ministry of Economic Affairs invited applications from companies and by Sept. 7, TSMC submitted its application to build a chip foundry, or fab, in the Songjiang Industrial Park (松江科技園) on the outskirts of Shanghai.

The government has been seeking more information from TSMC about its application, the ministry said yesterday in a statement. On Dec. 4, it asked TSMC to supply more details on the operation of its12-inch fab in Taiwan, the source of the financing for the proposed China fab and the allocation of manpower for the new plant.

"We have had a lot of communication with the government and it is normal for them to ask for clarification on the details of our application," Tseng said.

Analysts are not surprised that the government is taking its time making a decision.

"The TSMC case is very big and very sensitive," said George Wu (吳裕良), a chip-industry analyst at Primasia Securities Co. "The foundry industry is a great source of pride for Taiwan."

That pride sparked street protests in March, with academics, engineers and politicians urging the government to reconsider the decision to allow chipmakers to invest in China. At the time TSU Legislator Chen Chien-ming (陳建銘) said "nothing would be left in Taiwan if the ban is relaxed."

The government has been cautious, placing specific restrictions on foundry investments. The disks of silicon, or wafers, from which the chips are cut must be old-technology -- eight-inch diameter ones. The industry is now moving to 12-inch wafers which will yield more chips and increase profitability for chipmakers.

The government has stipulated that 12-inch fabs must stay in Taiwan for now.

It also forbid advanced 0.13-micron processing of chips being taken to China. Only computer chips etched with 0.25-micron processing can go.

Some industry-watchers have expressed concern that by the time TSMC gets government approval, it will take up to 18 months to set up the new fab, putting the company well behind China's emerging foundry industry.

"Shanghai's Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路) has already been licensed to make 0.18-micron chips for Singapore's Semiconductor Manufacturing Ltd and 0.14-micron chips for International Business Machines Corp. TSMC plant will be making 0.25-micron chips," Wu said.

But TSMC's Shanghai plant will only be seeking orders from the domestic Chinese market, which demands older technology, Rick Hsu (徐禕成), a chip industry analyst at Nomura International in Taipei, said yesterday.

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