US chipmaker National Semi-conductor Corp plans to start producing chips this quarter at a new assembly and testing plant in the Suzhou Industrial Park 80km west of Shanghai, the company told journalists at a luncheon in Taipei yesterday.
At the same time, the company plans to expand a design center in Taiwan's chip manufacturing heartland of Hsinchu which opened six months ago, National Semiconductor's Taiwan general manager Hsiao Wen-hsiung (
"We plan to start production at the Suzhou plant this quarter," Hsiao said, adding that 200 people are already employed there, with a further 300 to join them before the official opening of the estimated US$500 million facility.
The company plans to hire more staff this quarter at an advanced chip design facility in Taiwan.
"We will expand our timing control design center in Hsinchu from six to between 10 and 20 people," Hsiao said.
National Semiconductor joins a long line of chipmakers to set up final-stage manufacturing facilities in China to supply burgeoning demand for chips there, and to avoid a crippling 17-percent tax on imported chips, analysts said yesterday.
"National Semiconductor is following other [integrated device manufacturers] IDMs like Intel Corp, Advanced Micro Devices, and Fujitsu Ltd to set up in China," said Chris Hsieh (
"It's to do with value-added tax, which is very complicated in China," Hsieh said.
The US announced last week that it would take legal action against China in the WTO within months for unfairly rebating 80 percent of the value-added tax (VAT) it charges on semiconductors to local Chinese manufacturers.
Foreign companies cannot apply for the rebates.
National Semiconductor aims to grab a larger slice of the US$28 billion Chinese chip market with the new cost-cutting Suzhou plant.
To cut costs further, the company said last year it would not spend so much money on new equipment and plants by outsourcing more manufacturing to contract chipmakers like the world's largest, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).
TSMC is soaking up orders from companies no longer willing or able to shell out on advanced new chip manufacturing plants -- the most advanced now cost upwards of US$1.5 billion to build and equip.
"Everyone is increasing orders with TSMC as they are not building their own [advanced] fabs," said George Wu (吳裕良), an analyst at Primasia Securities Co in Taipei.
"It is an ongoing process," Wu added.
Taiwan still plays a critical role for National Semiconductor, the company's local manager said yesterday.
"In Taiwan we are here to cover our Taiwanese customers, in areas like notebooks, phone handsets and [flat-panel] customers including their sites in China," Hsiao said.
"We also have a marketing team that covers the Asia Pacific region," Hsiao said.
Taiwan dominates the notebook industry, producing over 70 percent of the units shipped last year, Hsiao added, citing local newspaper reports.
The nation's manufacturers also shipped 42.7 million handsets last year, up from 9.6 million in 2000, government figures show, and from almost zero the same year, Taiwan's thin-film transistor liquid-crystal display, or TFT-LCD, flat-panel industry has grown to supply 37 percent of the global market, shipping 38.5 million panels last year.
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