TSMC allowed to upgrade chip technology in China

TSMC can now use 0.13 micron chip production technology at its Shanghai factory

The Taiwanese government granted chip giant Taiwan Semiconductor Manufacturing Company (TSMC) permission to start using a more advanced chip technology at a factory in Shanghai, the first time the government has allowed a Taiwanese company to do so.

TSMC can now start using 0.13 micron chip manufacturing technology in China. That is more advanced than the 0.18 micron technology currently allowed by Taiwan law. Taiwan carefully controls technology transfer to China for a variety of reasons, including following international treaties to keep advanced technologies that could be used in weapons-making out of the hands of certain countries as well as its own shaky relationship with China.

Elizabeth Sun, deputy spokesperson at TSMC, said the company welcomed the government's move. She did not know how much demand there might be for the technology.

"The benefit is that it gives us the ability to offer a broader menu to our customers, so we can attract new business," she said.

The chip manufacturing technology is far from TSMC's most advanced. The company is already mass-producing chips in Taiwan using tiny 40-nanometer technology, less a third the size of 0.13 micron (130-nanometer) technology. Companies constantly strive to reduce the size of parts on a chip in order to make chips smaller and operate more efficiently.

Taiwanese regulations mandate that chip process technology must be at least three generations behind the latest technology in order to be allowed to China. TSMC already makes chips using 90nm, 65nm and 40nm and will soon be in mass production at 28nm, which could give it the three generations it will need to go ahead with 90nm in China.

Chips are made on large round silicon wafers. Hundreds of chips can be made on one wafer. The nanometer and micron measurements describe the microscopic size of transistors and other parts on a chip. A nanometer is a billionth of a meter, about the size of a few atoms combined.

Sun said 90nm will be tricky. TSMC only uses 90nm process technology on 12-inch silicon wafers and its Shanghai factory is an 8-inch wafer factory. Taipei has not yet given its chip makers permission to build 12-inch wafer factories in China. TSMC has no plans for a 12-inch chip factory in China right now, Sun said.

The company's 8-inch factory in Shanghai currently makes chips on 45,000 silicon wafers per month and will increase output to 48,000 wafers by the end of this year. The company is aiming for production to reach 60,000 to 70,000 wafers per month by the end of 2011. TSMC has factory space to support production of 110,000 wafers per month at its Shanghai facility.

Taiwan and China split in 1949 amid civil war and China has maintained a standing threat to take Taiwan by force if necessary. An arsenal of around 2,000 missiles are aimed at Taiwan from military outposts in China. But despite their strained political relationship, business between the two is booming due to their shared language and culture, and the growing electronics industry in China is attracting more investment from Taiwan.

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Tags business issuesComponentsTaiwan Semiconductor Manufacturing Co.investments

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Dan Nystedt

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