Chipmaker eyes Shanghai

Sept. 9–TAIPEI, Taiwan–Computer chip maker Taiwan Semiconductor Manufacturing Co. said Monday it has requested permission from the Taiwanese government to build a plant in Shanghai.

If the company gets approval, it could be the first Taiwanese firm to open a chip factory – also known as a foundry – in rival China. In March, Taiwan relaxed a long-standing ban on semiconductor companies investing in the mainland.

TSMC, the world’s biggest producer of made-to-order chips, said in a statement it plans to invest a total 30.7 billion Taiwan dollars ($898 million) in the foundry.

Taiwan had prevented the export of chip technology to China because the island feared it could weaken its dominance in the global semiconductor industry. But the government has bowed to pressure from high-tech firms that argued they would lag behind if they couldn’t take advantage of China’s cheap land and labor.

The foundry, to be completed in four years and located in Songjiang Science Park, would produce chips etched on 8-inch semiconductor wafers. The plant will have a target monthly capacity of 35,000 wafers, the company said.

Taiwan’s new regulations still ban companies from investing in plants in China that produce more advanced 12-inch wafers. Thinner lines are etched on the larger wafers, allowing the chips to run faster and use less electricity.

TSMC filed the application for the foundry with Taiwan’s ministry of economic affairs’ investment commission, which could review it as early as next month, an official said. The company has also officially filed an application in China.

The company’s chairman, Morris Chang, said in a statement that the chip maker decided to set up an operation in China because it would be difficult to “effectively claim market share in mainland China unless it offers direct, local foundry services.”

TSMC expects to have 1,000 employees in China. It plans to dispatch about 100 staff from Taiwan to its mainland company and will gradually recruit the rest in China.

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