TAIPEI, Taiwan -- Taiwan Semiconductor Manufacturing Co.'s chairman said that his company will sharply increase capital spending this year, called on the government to remove restriction on investment in China, and repeated a pledge to invest $20 billion at home.
TSMC, the largest pure-play foundry house worldwide, is set to boost its capex this year to $2.57 billion, 56% more than the $1.65 billion target forecast months ago, chairman Morris Chang said during a visit today to Taiwan's Premier. In 2001, the company spent $2.2 billion.
Chang also assured Premier Yu Shyi-kun that TSMC would keep the promise it made last year to invest $20 billion building five of the most advanced 300mm wafer facilities in Taiwan in the future. He didn't give a timetable, though.
The move of the chairman comes days before the premier is slated to announce a decision on whether to lift the ban on 200mm wafer investments in China. TSMC and its biggest competitor, United Microelectronics Corp., have been urging the government to ease the restriction since mainland China is widely seen by industry leaders and analysts as the market that's growing faster than any others in the years to come.
"China will represent 20% of the global semiconductor market in the next 20 years," Chang said. "It's time to start getting foothold there. What I believe is that the ban should have been removed two years ago."
TSMC and UMC, which together dominate about two-thirds of the foundry service industry, are feeling the pinch from two Chinese startup rivals, which are linked to Taiwan's capital and engineering talent. Shanghai-based Semiconductor Manufacturing International Corp. and Grace Semiconductor Manufacturing Co. are already producing or poised to make 200mm wafers.
"TSMC and UMC will be doing fine for the next one to two years," said Alfred Yin, research head of BNP Paribas Peregrine Securities in Hong Kong. "The longer it takes for the government to remove the ban, the less leading edge they would have when they actually invest there."
TSMC now has two 12-inch wafer plants on the island, one in the Hsinchu science park and the other one in the Tainan science park. The $20 billion investments -- which the company announced months ago -- would be used to construct four others in Tainan and one in Hsinchu, said the chairman.
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