Taiwan Semiconductor Manufacturing Corp, or TSMC, announced on Sunday that the plant, covering more than 399,600 square meters, would be built in Songjiang District. Its monthly production volume will be more than 40,000 silicon wafers.

A made-to-order chipmaker, or foundry, receives blueprints of integrated circuits from chip design houses and carves circuits onto blank silicon wafers.

The announcement of TSMC's investment in Shanghai should not be a surprise to the local chip industry as the company's plan of building new fabrication plants in the city has been pending approval from Taiwan authorities since last September. The island has long been reluctant in allowing its chipmakers to invest on the mainland as it fears the trend could undermine its chip industry.

Shanghai has outbid many mainland cities to win this project as Shenzhen, Suzhou, Nanjing and Beijing are all keen on becoming the mainland's chip production hub.

With the deal, the city consolidates its leading position in the Chinese mainland's chip industry. Already more than 60 percent of home-made chips are manufactured in the city, according to CCID Consulting, the mainland's leading IT consulting firm.

The 40,000-plus-wafer monthly production capacity might not be significant as TSMC currently boasts a monthly capacity equal to 236,151 eight-inch wafers. But it could help the development of the local chip industry significantly.

Last year, though the world's semiconductor industry was still suffering from its longest and worst downturn, TSMC reported a 28 percent growth in its sales to NT$160.96 billion (US$4.83 billion), while its net profit jumped 49 percent to NT$21.61 billion from more than a year ago.

(Shanghai Daily June 10, 2003)