Sat, Nov 18, 2000 page18

• TSMC starts 12-inch line

  CUTTING EDGE The apparently smooth transition to 12-inch wafer production leaves TSMC well placed to benefit from lower production costs in the long term

  • By Thomas Ker / CONTRIBUTING REPORTER
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  The world's largest producer of made-to-order chips, Taiwan Semiconductor Manufacturing Co (台積電), announced Thursday that it began production of the foundry industry's first 12-inch wafers for customer products.

  Programmable logic device supplier Altera Corp and Taiwan-based Brilliance Semiconductor Inc, a supplier of SRAM for portable applications, are among the first customers to have their designs produced on 12-inch wafers during the fourth quarter, TSMC said in a statement.

  The announcement puts TSMC just ahead of schedule in its development plans, and leaves it well placed to become one of the world's top integrated circuit manufacturers, analysts said.

  It also provided some good news when a falling NASDAQ and questions about TSMC's short-term prospects pulled down its stock price.

  "We believe that with a surface area 2.25 times larger than its 8-inch predecessor, and capable of even higher yields, the 12-inch wafer will become the workhorse technology of the IC industry," said N.S. Tsai, senior director of TSMC's 12-inch project, in a prepared statement.

  TSMC is producing the wafers at its 12-inch pilot line in its Fab 6 plant in Tainan. The plant, opened in March this year, is "TSMC's last 8-inch production facility and its first 12-inch production facility," company head Morris Chang (張忠謀) at the time.

  When fully utilized next year, the pilot line will be able to produce 4,500 wafers per month or the equivalent of about one-third the typical capacity of a 8-inch wafer production facility. The pilot run will use 0.18, 0.15, and 0.13 micron technology.

  TSMC will also have built up a cost advantage over its competitors, most of which have yet to move to 12-inch wafer production.

  "In the long term, the 12-inch wafer will replace the 8-inch wafer because the cost of the 12-inch wafer is about 40 percent lower," said Ken Cheng, an analyst at China Securities Co.

  TSMC's 12-inch wafer production announcement is a little earlier than its previously stated timetable and leaves the company strongly placed to become one of the world leaders of the integrated circuit manufacturing industry, Cheng said. "This is good long-term news," he said.

  However, TSMC's share price fell yesterday as shorter-term issues came to the fore. The stock fell 1.5 percent to NT$98.5, after falling 6.5 percent the previous day amid concerns about the company's capacity utilization rate next year.

  In addition, Merrill Lynch analyst Dan Heyler downgraded the company to "accumulate" from "buy," along with competitors United Microelectronics Corp (聯電) and Chartered Semiconductor Manufacturing Ltd of Singapore.

  TSMC also said Thursday that it would install a "cleanroom" in its Fab 12 plant next month, rather than at the beginning of next year as announced earlier. A cleanroom is essential in the wafer production process because contamination anywhere on the wafer can harm the quality of the circuit.

  Fab 12, being constructed in Hsinchu Science-Based Industrial Park, is expected to start 12-inch wafer production at the beginning of the fourth quarter of next year.

  "In total, TSMC is scheduled to have the capacity to produce 23,000 12-inch wafers in 2001," said F. C. Tseng, president of TSMC, in a prepared statement. Capacity should rise to more than 200,000 in 2002, and nearly one million 12-inch wafers in 2003, he said.
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