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China to rival Taiwan in chip making; Business Council reports

Posted: 02 Nov 2004 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor? tsmc? umc? smic?

The U.S.-Taiwan Business Council has released the "Semiconductor Report - Third Quarter 2004," the latest in a series of quarterly reports analyzing emerging trends in the integrated relationship between the U.S., Taiwan, and mainland China in the semiconductor industry.

The report analyzes the impact mainland China's largest semiconductor foundry, Semiconductor Mfg Int. (SMIC), will have on the future growth of mainland China's semiconductor industry, and globally, as SMIC continues to grow its list of partners, customers and technology offerings. SMIC opened China's first advanced 12-inch wafer fab in September, and is reportedly planning to begin supplying semiconductors using 90nm (0.09?m) technology in the first half of 2005.

SMIC's new manufacturing capability puts the company in a better position to compete with top industry providers in advanced 12-inch semiconductor production based in Taiwan. Taiwan is home to known semiconductor foundries, Taiwan Semiconductor Mfg Corp. (TSMC) and United Microelectronics (UMC), as well as recognized DRAM manufacturers. According to the report, it will take longer for SMIC to catch up to the Taiwan foundry giants, but at its current rate of progress, it may only be a matter of years.

Taiwan's semiconductor manufacturers are limited in their ability to effectively compete in mainland China, as the Taiwan government has restricted companies to using mature 8-inch wafer fabs with 0.25?m or larger manufacturing technologies. TSMC is the only Taiwan foundry who opened a fab in China, and is lobbying the Taiwan government to allow 0.18?m manufacturing so it can compete with its Chinese rivals. It was mentioned in the report that TSMC's presence in mainland China will surely have an impact, but the limits on its technology offerings there mean SMIC will still be the mainland China-based foundry of choice.

Changes to the Taiwan government restrictions are not expected until at least next year, providing SMIC enough time to begin mass production at the most advanced technology available - free of any competition in its home market.

The council is closely monitoring developments in mainland China's semiconductor industry, particularly its 12-inch manufacturing capabilities. Council President Rupert Hammond-Chambers, said, "The council is also monitoring rising tensions in the cross-Strait environment. Taiwan is a key provider of semiconductors and information technology goods for the global technology industry, with manufacturing both domestically and in mainland China. The potential supply chain disruptions resulting from a conflict between Taiwan and mainland China would have profound implications for the global economy."

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