Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s biggest contract chip maker, said this week it has signed an agreement with the Nanjing City Government to spend $3 billion on an advanced microchip wafer manufacturing plant in China.
The announcement comes after the firm said in December it planned to build its own wholly-owned fab plant in China with a $3 billion investment, highlighting the importance of the Chinese market for semiconductor firms.
“With our 12-inch fab and our design service center in Nanjing, we aim to provide closer support to customers as well as expand our business opportunities in China in step with the rapid growth of the Chinese semiconductor market over the last several years”, said TSMC Chairman Morris Chang in a statement, adding “We look forward to stronger collaboration with our customers to further expand our market share in China”.
The move highlights the fact that TMSC is going it alone to maintain its technology lead, as rivals from China are busy acquiring smaller chip companies.
TSMC had pressed authorities to allow so-called 12-inch facilities, which use more advanced technology than 8-inch plans, and will be wholly-owned out of concerns over intellectual property protection. The company already has a wholly-owned 8-inch fab plant near Shanghai.
Based in Nanjing, China, the new plant will be capable of producing 20,000 12-inch wafter every month, and also includes a new service centre, TSMC says, and that production will start in the second half of 2018.
China currently views Taiwan as something of a rebel province, and has not ruled out the use of force to bring it under control. However, relations have improved in recent years.
Taiwan has to date restricted manufacturing activities of its semiconductor industry in China, due to political tension between the two. Competition from China’s fast-growing chip industry however has pressured Taiwanese companies to expand into the mainland.