Wed, Jan 22, 2003 - Page 10 News List

TSMC's fab plan under review

By Bill Heaney  /  STAFF REPORTER

The government should stop delaying final approval of Taiwan Semiconductor Manufacturing Co's (TSMC, 台積電) planned investment in China, industry watchers said yesterday.

The Cabinet gave Taiwan's semiconductor industry the go-ahead to invest in China last March, but TSMC's formal application, submitted on Sept. 7 last year, has yet to receive approval. The government may approve it today.

"This is a necessary move for Taiwan's semiconductor industry," said Gordon Chen (陳文咸), president of the Taiwan Semiconductor Industry Association (台灣半導體產業協會). "The government needs to decide now [otherwise] we'll certainly have a much bigger challenge in the China market."

Taiwan's technology industry has been moving plants to China -- where labor costs and overheads are much cheaper -- since the late 1980s. As of the end of last year, Taiwanese companies had invested US$66.8 billion in China, Central Bank of China Governor Perng Fai-nan (彭淮南) said last Friday.

The two largest manufacturers of made-to-order chips in the world -- TSMC and rival United Microelectronics Corp (UMC, 聯電) -- are a source of pride for the nation. Therefore, the decision to allow TSMC to invest in China sparked street protests in March 2002.

Final approval has been a long-time coming. The Cabinet's proposal was handed to the Ministry of Economic Affairs and the Mainland Affairs Council in March 2002 for fine-tuning. That plan restricts China chip investments to older eight-inch 0.25 micron processing technology.

The disks of silicon, or wafers, from which computer chips are cut are currently eight inches in diameter. Taiwan's industry is moving to larger, more efficient 12-inch wafers that yield more chips per wafer. Taiwanese foundries in China must stick to eight-inch wafers, the government said.

The industry in Taiwan is also shrinking the transistors etched into the chips to 0.13 microns and even 90 nanometers across, a process which concentrates more transistors on each chip.

China fabs, meanwhile are to be restricted to much larger 0.25-micron transistor technology and above.

The government published the restrictions in August last year, and invited applications from Taiwan's foundries. TSMC submitted its application in September and provided further details on its plan to the government on Dec. 4, 2002.

The government sought more information on TSMC's 12-inch fab in Taiwan, the source of financing and staff for the proposed China fab, spokesperson Tzeng Jinnhaw (曾晉皓) said yesterday. The economics ministry and the council are scheduled to meet with other government bodies today.

The semiconductor industry's Chen is baffled by the delay.

"The 0.25-micron processing technology should not be a contentious issue," he said. "China has already obtained better technology."

The government restrictions have prevented at least one other chipmaker from investing in China.

"Our eight-inch fab is still quite competitive with 0.15-micron processing technology," said Eric Tang (譚仲民), vice president of memory chipmaker Powerchip Semiconductor Corp (力晶半導體).

"China investments must use 0.25-micron technology, and we are much more advanced than that."

Powerchip is setting up a 12-inch wafer fabrication plant in Taiwan, and is planning to expand its existing eight-inch fab here.

UMC said it has no plans to invest in China at this time.

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