Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which supplies chips for Apple Inc’s iPhone 6S series, yesterday said it has signed a US$3 billion investment agreement with the government of Nanjing city in China to produce 16-nanometer chips in the world’s largest semiconductor market.
It is the single largest China-bound investment by a Taiwanese company.
The chipmaker plans to establish a wholly owned subsidiary in China, TSMC (Nanjing) Co Ltd (台積電 (南京)), to manage the company’s first 12-inch wafer fabrication in China and a design service center there.
“With our 12-inch fabrication and design service center in Nanjing, TSMC aims to provide closer support to customers as well as expand its business opportunities in China in step with the rapid growth of the Chinese semiconductor market over the past several years,” TSMC chairman Morris Chang (張忠謀) said in a company statement.
“We look forward to stronger collaboration with our customers to further expand our market share,” Chang said.
In January, Chang said that manufacturing costs in China were still higher than in Taiwan in response to an investor’s question.
“The scale is smaller, so the cost is higher. We hope to make up for that by expanding our market share,” Chang said at the time.
TSMC holds the largest foundry market segment share in China with more than 100 Chinese customers, including Hisilicon Technologies Co (海思半導體), a handset chip designer owned by Huawei Technologies Co (華為).
Revenue from Chinese clients made up 8 percent of TSMC’s overall revenue of NT$843.5 billion (US$25.8 billion) last year, according to TSMC’s financial report.
TSMC’s new 12-inch plant, located in Nanjing’s Pukou Economic Development Zone would have a planned capacity of 20,000 12-inch wafers per month, the chipmaker said.
The facilities are scheduled to start production of 16-nanometer chips in the second half of 2018.
The chipmaker has began volume production of 16-nanometer process technology for customers in the third quarter of last year in its Tainan plant, which accounted for more than 50 percent of the international foundry market for 14-nanometer and 16-nanometer wafers that year.
The company’s market share in the segment is expected to increase by 20 percentage points to more than 70 percent this year, TSMC told investors in January.
The company forecast that its share in the international 14-nanometer and 16-nanometer chip market would increase this year.
The 16-nanometer chips would account for more than 20 percent of the company’s total revenues this year, it said.
TSMC’s 12-inch wafer factory would be the third such facility by Taiwanese chipmakers in China after United Microelectronics Corp (UMC, 聯電) and Powerchip Technology Corp (力晶科技) broke ground for their first 12-inch wafer factories in China early last year.
TSMC shares increased 0.63 percent to NT$159 yesterday, outperforming the TAIEX, which lost 0.17 percent.
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