TSMC mulls mainland – maybe

By Matt Wickenheiser
WaferNews Editor

Last year, Taiwan Semiconductor Manufacturing Co. stated it would only invest in 300mm in the future. Then, early this year, TSMC Chairman Morris Chang said the company was mulling the possibility of a 200mm facility in China, and local media have quoted unnamed sources pinpointing Jiangsu Province as the spot for the first fab.

So which is it?

Both – sort of.

According to Charles Byers, worldwide director of communications for TSMC, any thoughts of putting a 200mm fab in China were “highly exploratory,” and hinged on some very specific conditions. However, a 200mm fab would mean TSMC could move equipment from Taiwan to China, opening up space for new 300mm equipment in Hsinchu.

“What we are doing is opening our options — when considering construction of fabs in China,” said Byers. “One of the options we are looking at might be to move 8” equipment into China. I think we would weigh it as ‘What would be the best use of existing resources?'”

But, Byers told WaferNews, TSMC will do nothing until the Taiwan government changes the regulations regarding the level of foreign investment Taiwanese companies can make abroad, capped now at US$50 million. Taiwan recently postponed deciding whether or not to lift or modify the regulations.

Additionally, Byers said, several other factors would need to be met in order to seriously consider a fab in China – the physical infrastructure would need to be in place, a stable work force should be accessible, and China should be in the WTO (allowing advanced technology in the country).

Semico Research Analyst Joanne Itow called TSMC’s strategy a smart one, noting that the foundry could benefit from cost savings from a Chinese government eager for investments, including lower land costs and low-cost loans. Additionally, she said, this would be a way for TSMC to have access to the China market.

“It allows them to move some of their plain vanilla products and processes to China, but also allows them to keep their brain trust with R&D and 300mm technology in Taiwan,” she said. “It also makes sense in terms of Taiwan’s limited amount of resources – land and infrastructure. This allows them to move 8” to China and then re-equip their assets in Taiwan. They’re still adding capacity.”

Risto Puhakka, VP of operations at VLSI Research, agreed, adding that Taiwan was tapped on its intellectual capacity. You can only build so many fabs in a given region, he said, before the labor pool becomes an issue. Bringing people in is expensive, he said. It’s only natural for TSMC to look elsewhere, to China and, possibly, to some areas of the US, Puhakka said.

“I think that would be the fundamental driving force for Taiwanese companies to move out. It’s not that Taiwan is a bad place; it’s tough to bring in a labor force,” said Puhakka. “TSMC has its best and brightest in Taiwan. It would make sense to have them work on 300mm and get 200mm somewhere else. Singapore has a fabulous support structure already built up.”

The recent media reports speculating on construction in the eastern Jiangsu Province cited either the Suzhou New District or the Wuxi-Singapore Industrial Park as possible TSMC fab locations. The Taipei Times said that TSMC has already completed a preliminary study on the region.



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