The world's largest made-to-order chipmaker will invest US$222 million more in its Shanghai plant and increase its capacity by up to fivefold after the Taiwan-based firm found the local chip industry environment to be attractive.

Taiwan Semiconductor Manufacturing Company Ltd, better known as TSMC, plans to invest US$1.12 billion into its eight-inch silicon wafer plant in Shanghai Songjiang Science and Technology Park, said Sheldon H. Wu, chief representative of TSMC's Shanghai office.

"We will process about 35,000 silicon wafers each month," Wu told Shanghai Daily during a local integrated circuit forum. "The factory will start volume production in the fourth quarter of next year."

TSMC planned to build four wafer factories in Songjiang and the plant under construction is its first phase project. Its final monthly capacity could reach 70,000 wafers, local officials with the park said.

TSMC has previously announced it would invest US$898 million to build a wafer plant with a monthly capacity of 12,000 wafer chips in the park, which is 35 kilometers southwest of Shanghai Hongqiao Airport.

Made-to-order plants, or foundries, receive blueprints of integrated circuits from chip design companies and carve them onto blank silicon wafers. The finished wafers will then be sent to chip assembly and test plants to be packaged into chips, which will be installed in mobile phones, computers and home appliances.

As the world's largest foundry company, TSMC raked in US$4.7 billion last year, taking 43 percent of the global foundry market, according to IC Insights Corp.

The main reasons behind TSMC's expansion plan are the city's ideal geographic location, preferential policies and decent labor resources, said Wu.

"Since the local government and the park developer are keen in attracting integrated circuit companies, they offer us 30 percent discounts on land rents," Wu said. TSMC's current plant occupies some 1.33 square kilometers.

"The government is also building a 'university city' nearby, and we expect it will provide us with high-quality talents," he said. "Also, companies in the park can clear customs within four hours."

Another reason behind TSMC's plan is the complete integrated circuit industry chain in the Yangtze Delta area, said Zou Shichang, chairman of Shanghai Integrated Circuit Industry Association.

"More than half of the integrated circuit companies on the mainland are in the area now," Zou said.

(Shanghai Daily September 15, 2003)