TAIPEI, Taiwan - Taiwan Semiconductor Manufacturing Co. confirmed Thursday that it has signed a letter of intent with an unnamed Chinese company to build a wafer fab in the Songjiang district of Shanghai.
TSMC offered few details, aside from saying it would not transfer money to China to support construction of the plant until it received approval from the Taiwan government. A spokeswoman declined to say when the company would seek that approval. She also noted that TSMC would not take over the fab shell, which is believed to be under construction, until China showed a "business necessity" for such an operation.
Last year, China electronics systems makers digested $15.5 billion of ICs, many of which ended up in products for export to the US and Europe, and that market is expected to grow to about $35 billion by 2005. To satisfy such demand, however, China imports more than 90 percent of its chips, a trend that is expected to continue for at le ast the next few years.
China's national and local governments are pushing hard to change that. They are offering companies such as TSMC, and its rival, United Microelectronics Corp., tax incentives, free land, and discounts on water and electricity. Local governments have competed intensely with each other to win the heralded semiconductor plants.
China has made a start at self-reliance in supplying its massive domestic demand. It has three 8-inch wafer plants, built by Motorola, Hua Hong NEC Electronics Co., Ltd and Semiconductor Manufacturing International Co. and at least one or two more will open next year.