Fri, Jan 10, 2003 - Page 11 News List

TSMC says construction hasn't started in China

BLOOMBERG , SHANGHAI

Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電), the world's largest supplier of made-to-order chips, denied a report it's started construction on its first chip plant in China, an US$898 million project pending approval by the Taiwan government.

"We haven't given a contract to anyone," said Taiwan Semiconductor spokesman Tzeng Jinnhaw (曾晉皓), responding to a report in a local Chinese-language daily that a contractor has been hired for the Shanghai plant. "We still expect approval from the government soon."

Approval for the island's first chip factory in China is expected before the start of the Lunar New Year on Feb. 1, several government officials including Vice Premier Lin Hsin-yi (林信義) and Minister of Economic Affairs Lin Yi-fu (林義夫) had said recently.

The government last year said it would end a ban imposed to withhold Taiwan technology from its political rival. In September, the chipmaker applied to the Taiwan government for permission to build a plant in an industrial part in Songjiang, a suburb of Shanghai.

Contracts with local construction companies have been signed, with the factory to be finished by August, when TSMC will move production equipment and about 600 employees to Songjiang from Taiwan, the newspaper report said.

Local chipmakers said the ban hurts their ability to compete with rivals and with a fledgling mainland chip industry in a market that's expected to become one of the world's biggest for semiconductors.

China's chip market last year was worth $12 billion, making it the world's third largest, according to the Chinese government.

Meanwhile, TSMC yesterday said its December sales slipped 3 percent from a year earlier to NT$11.3 billion (US$327 million).

Compared with November, sales were down 23 percent, in line with the company's and analysts' expectations.

The company also said its factories operated at 61 percent of capacity in the fourth quarter of last year, down from 79 percent in the third. Gross margin, or sales minus production costs, narrowed by about 6 percentage points from the third quarter's 35 percent, meeting analysts' forecasts.

"Gross margin fell from the third quarter because of fewer shipments," said Cheng Ming-kai (鄭名凱), an analyst with CLSA Ltd. ``The results are within our expectations.''

Rival United Microelectronics Corp (聯電), the world's second-largest maker of made-to-order chips, said in a release that December sales rose 25 percent from a year ago to NT$5.5 billion.

Sales were NT$4.4 billion in December 2001 and were NT$6 billion in November 2002.

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