Although the government has given the green light to the Taiwan Semiconductor Manufacturing Corp (TSMC, 台積電) to start preparations for the construction of an 8-inch wafer plant in China, the domestic foundry industry is not optimistic about a speedy decision by the Investment Commission on TSMC's second-stage screening.
The government requires local chipmakers who want to invest in 8-inch chip production in China first demonstrate that they have attained "commercial production" of domestically made 12-inch chips.
But TSMC vice president Genda Hu (
He added that the "commercial production" clause does not necessarily contradict the government's policy to prevent a rapid capital and technology outflow to China
Hu said that TSMC will abide by the government's regulations.
John Hsuan (宣明智), vice chairman and chief executive officer of United Microelectronics Corp (UMC, 聯電), said that he sees no relevance between 12-inch chip "commercial production" in this country and China-investment plans.
The Ministry of Economic Affairs' Investment Commission gave approval Wednesday to TSMC's request to remit approximately US$50 million from its foreign exchange reserves to China for land acquisition and development of its 8-inch wafer plant project in Shanghai.
That amount is equivalent to about 6 percent of TSMC's projected capital investment of US$898 millions.
The company plans to transfer US$371 million from its headquarters. Another US$418 million will be raised through loans from Chinese banks and US$109 million from its operational revenues.
* ``Commercial production'' of 12-inch wafers is required before TSMC may build the 8-inch facility in Shanghai.
* Question remains as to what ``commercial production'' of 12-inch wafers means.
* Land acquisition funds of US$50 million has already been approved.
* The company plans to transfer US$371 from its headquarters.
* US$418 is to be borrowed from Chinese banks.
* Operational revenues are to make up the remaining US$109 of the total US$898 million investment projection.
A source from the Taiwan Semiconductor Industry Association (
Some politicians and economists believe that the government must not allow local semiconductor manufacturers to make investments in China while local products are losing their competitive edge to Chinese products in the international market.
Chen Po-chih (陳博志), chairman of the Taiwan Thinktank (台灣智庫), said with an annual production value of NT$600 billion, the semiconductor sector remains the backbone of the nation's economy.
But local semiconductor manu-facturers must keep in mind how to keep the local industry's competitive advantage, Chen added.
Although China is investing in its own wafer foundry construction, Taiwan still maintains a competitive advantage, Vice Minister of Economic Affairs Shih Yen-hsiang (施顏祥) said yesterday.
However, Shih said the country needs to woo more investments by global semiconductor manufacturers to maintain competitiveness.
The ministry is trying to attract investments from such semiconductor giants as Applied Materials of the US and Tokyo Electron of Japan, he said.
The nation's global market share of 12-inch wafer-related products is currently between 14.5 percent and 14.7 percent, Shih said.
It is estimated that by 2005, Taiwan's market share will increase to 25 percent, he added.
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