TAIPEI — Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest foundry, said today that it aims to build its first 12-inch fab in China to tap strong demand in the world’s fastest growing chip market.
The company said in a press release that it submitted an application to Taiwan’s Investment Commission under the Ministry of Economic Affairs to build a wholly owned 12-inch fab and a design service center in China’s inland city of Nanjing.
“In view of the rapid growth of the Chinese semiconductor market, we have decided to establish a 12-inch wafer fab and a design service center in China to provide closer support to our customers there and to further expand our business opportunities,” TSMC Chairman Morris Chang said in the press statement.
TSMC will join a growing list of chipmakers that have already started 12-inch fab projects in China, which, according to industry organization Semiconductor Equipment and Materials International (SEMI), has one of the world’s largest semiconductor markets, yet imports most of the chips it uses to assemble products such as Apple iPads and iPhones.
TSMC would join Intel, Samsung, SK Hynix and Chinese chipmakers such as Semiconductor Manufacturing International Corp. (SMIC), which have opened or are underway with projects to make chips on 12-inch wafers, according to SEMI.
TSMC said it will own 100 percent of the fab, which will help the company protect its intellectual property and trade secrets.
The sum of the entire investment project is $3 billion, including equipment, some of which will come from existing fabs in Taiwan, and assistance from the Chinese government, according to TSMC. As a result, the company’s net investment will be less than $3 billion.
TSMC said Nanjing has a relatively complete semiconductor supply chain and a large pool of engineering talent. These factors, as well as the local government’s willingness to support TSMC, led to the decision, the company said.
TSMC said the planned capacity of the new facility in China is 20,000 12-inch wafers per month, and the company aims to begin volume production of 16nm process technology in the second half of 2018. TSMC said the design service center would establish the company’s design ecosystem in China.
TSMC’s compound annual growth rate for revenue from Chinese customers, including chip design companies such as HiSilicon, has exceeded 50% in the past five years.
TSMC expects the fab headcount to be 1,200. Initially, staff from Taiwan and an existing 8-inch fab located in Shanghai will help with construction and the production ramp up at Nanjing, with additional local hiring as the schedule proceeds. Before volume production starts, staff transferred from Taiwan will account for more than 50% of the personnel at Nanjing.
The Taiwan government has restricted domestic chip investments in China on concerns it will lose jobs and technology.
TSMC said it will keep its most advanced process technologies, key production lines, and core R&D efforts in Taiwan. The investment in China is aimed at increasing business opportunities in China, which TSMC said will have a positive effect on additional expansion in Taiwan.
TSMC plans to start the project after receiving approval from Taiwan’s Investment Commission.
—Alan Patterson covers the semiconductor industry for EE Times. He is based in Taiwan.