Tue, Dec 21, 2010 - Page 12 News List

TSMC plans to increase research spending

FENDER BENDER:The head of the chipmaker likened his firm to a Toyota and Intel to a Mercedes, but as the US firm moves into the contract business, they could trade paint

By Lisa Wang  /  Staff Reporter

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s top contract chipmaker, yesterday said it planned to raise its spending on research and development by nearly 39 percent to NT$50 billion (US$1.63 billion) next year, as part of efforts to fend off growing competition from its peers.

This year, TSMC budgeted NT$36 billion for research and development spending, company chairman and chief executive Morris Chang (張忠謀) said in his speech at an event arranged by local think tank the Chung-hua Institute for Economic Research (中華經濟研究院).

“In the last five years, TSMC has seen a threat from overseas [companies],” said Chang, who founded TSMC in 1987. “TSMC has grown to be a company that is 10-fold, or even 20-fold bigger than the one I imagined back in 1985.”

“We think technology is the most important [factor behind this success],” Chang added.

Earlier this year, Chang said it was the firm’s mission to become a major chip technology and capacity provider to the global chip industry in the years to come.

TSMC is one of the world’s top three semiconductor companies in terms of technological capability, along with US chip giant Intel Corp and South Korea’s Samsung Electronics Co, Chang said.

Presently, TSMC is not in direct competition with Intel and Samsung, Chang said.

“Intel is the semiconductor industry’s Mercedes-Benz, while TSMC is a Toyota,” Chang said, using the automobile industry as a metaphor.

However, in the next 20 years, “we will be rivals,” Chang said, adding that the growing popularity of affordable netbooks and smartphones is a trend that favored TSMC.

Intel and Samsung are makers of logic chips and memory chips, but in recent years they have expanded into the field of contract chip manufacturing, which is TSMC’s main market.

Commenting on the upward trend of the New Taiwan dollar against the US dollar, Chang said “for TSMC, it is an issue.”

TSMC’s gross margin would fall to between 48 percent and 50 percent this quarter, from 50 percent in the third quarter, if the NT dollar rose to NT$30.6 against the US dollar, the chipmaker said in October.

Chang expects a gradual appreciation of the local currency against the greenback, judging from the central bank’s recent intervention in the currency market, he said.

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