The government yesterday gave computer chip-maker Taiwan Semiconductor Manufacturing Co (TSMC,
"We have in principle approved TSMC's application to invest in China," Minister of Economic Affairs Lin Yi-fu (
The government wants to know more about how TSMC will raise and use its funds in the China investment plan, he said.
TSMC's initial application, submitted in September last year, was first reviewed by the government last month. At that stage, the government asked TSMC to supply more information on personnel and financing as well as details about TSMC's current operations in Taiwan.
An inter-ministerial review committee grilled TSMC executives on those issues yesterday for almost two hours. The five-member TSMC delegation included deputy CEO Tzeng Fan-cheng (曾繁城), vice-president Harvey Chang (張孝威), and Chao Ying-cheng (趙應誠), who is slated to head the new wafer fab in China.
Manpower for the plant is to come from TSMC's Taiwan operations and overseas subsidiaries, TSMC said at the meeting. While several committee members expressed concerns that local jobs would be lost due to the investment, Chen Chao-yi (
TSMC's US$898 million plan to set up the China fab was questioned by the review committee, which sought to learn the source of some US$527 million.
The remaining US$371 million is expected to come from Taiwan. TSMC said yesterday that they would seek US$418 million from banks in China.
A further US$109 million would come from factory revenue once it began operations.
Lin welcomed the news that TSMC would not transfer the total US$898 million investment from Taiwan, but requested TSMC to report to the Ministry of Economic Affairs' (MOEA) Investment Commission in mid-February to give a more detailed account of how it will raise and use the funds in China.
If the account is satisfactory, the matter will be passed to the Cabinet. With the Cabinet's approval, TSMC will gain a license to set up TSMC (Shanghai) Ltd, allowing it to transfer funds and start building the shell that will eventually house the fab.
Analysts have said that land has already been cleared for the fab in the Songjiang Industrial Park (
The right to set up the Shanghai firm and start building the factory is only the first phase of the TSMC investment. Minister Lin was unable to give a timetable for the second phase -- shipping old chip-making equipment from Taiwan to start production.
To meet government demands to keep advanced chip technology in Taiwan, TSMC plans to invest NT$200 billion in Taiwan to build three more 12-inch wafer fabs over the next five years.
Despite the government's delay in granting final approval, analysts welcomed today's announcement. "This is good news," said George Wu (
While welcoming the news, James Huang, (
Today's committee meeting, chaired by Lin, included representatives from the Ministry of Economic Affairs, the Ministry of Finance, the Mainland Affairs Council, the Central Bank of China, the Council for Economic Planning and Development, the Council of Labor Affairs, and the National Science Council. Four different agencies under MOEA were also present.
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