TSMC confirms plans to build in China

Taiwan Semiconductor Manufacturing Co has confirmed that it plans to commence production in mainland China by the end of this year, and that it is currently surveying prospective manufacturing sites.

As the world's premier independent foundry operator, TSMC is the brightest star in Taiwan's chip industry, so its decision to join the throng of Taiwan company's moving to China is a blow for those worried that the country's economic independence is being eroded by the inexorable pull of China's huge market.

According to a TSMC spokesperson, the decision to invest in China is seen as an "inevitable" step for TSMC. China's chip market was worth $12bn last year, but to trade effectively with China "you have to be there," the spokesperson said.

TSMC and its near rival and neighbor United Microelectronics Corp would both probably have put down a manufacturing base in China before now had they not been prevented from doing so by Taiwanese government restrictions on investment in China. Those restrictions have now been lifted and Taiwanese companies, many of which feel they were badly disadvantaged by the government collar on Chinese investment, are now rushing to make up lost ground.

Nevertheless, a wholesale abandonment of their home market is unlikely to happen, not least because Taiwanese chip makers are still forbidden from transferring 300mm wafer process technology to the mainland, and building 300mm plants on Taiwan is also a condition of being permitted to invest in China. So TSMC is sticking to its earlier promise to build two new 300mm plants on the island, the spokesperson said.

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