Mainland chipmakers prepare for Taiwanese rivals

Taipei, Taiwan – Mainland Chinese chipmakers are accelerating expansion plans and slashing foundry prices to preempt challenges from Taiwan’s top two chipmakers, which are expected to move part of their 200mm wafer facilities to the mainland.

Taiwan’s government recently approved the proposal to allow chipmakers to invest in 200mm wafer plants in mainland China. The approval was granted on condition that only three such plants are opened across the Taiwan Strait by 2005.

The island’s top-two chipmakers — Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) — are expected to soon move part of their older 200mm wafer facilities to the mainland to maintain their competitiveness in dedicated foundry services, reported the Financial Times.

China’s leading dedicated foundry suppliers including Semiconductor Manufacturing International Corp. (SMIC), Shanghai Grace Semiconductor Manufacturing Corp., and some Japanese-invested companies such as NEC Hua Hong Semiconductor Manufacturing (Shanghai) are speeding up expansion plans ahead of the Taiwanese chipmakers’ arrival.

Some manufacturers running six-inch fabs such as CSMC-HJ Semiconductor Co. Ltd. have also reduced charges for their foundry services. SMIC CEO Richard Zhang visited Beijing and Nanjing to seek sites for a new factory. SMIC is headquartered in Shanghai and now operates one 200mm fab.

Shanghai Grace has held several investor conferences in Shanghai to raise capital for expansions. Both Zhang and Shanghai Grace’s CEO Winston Wang are Taiwanese. Zhang was a former president of Taiwan’s Worldwide Semiconductor Manufacturing Co., while Wang is a son of Formosa Plastic Group chairman, Y.C. Wang. Zhang has said he welcomes TSMC and UMC to set up factories in the mainland, saying their arrival will help create chip industry clusters in the mainland, reported the Financial Times. However, some mainland chipmakers say that the two chip giants will have a hard time succeeding in the mainland’s young chip foundry market.


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