TSMC says no big impact from Intel's new China fab

TAIPEI, March 14 (Reuters) - TSMC (2330.TW: Quote, Profile, Research, Stock Buzz) (TSM.N: Quote, Profile, Research, Stock Buzz), the world's top contract maker of microchips, saw no immediate major impact from a plan by Intel Corp. (INTC.O: Quote, Profile, Research, Stock Buzz) to set up a $2.5 billion chip plant in China, the Taiwan firm said on Wednesday. "For the impact on TSMC, the direct impact won't be big," TSMC chairman Morris Chang told a media gathering. It would take at least two to three years (for the plant) to start producing, he said.

The comments came after China's National Development and Reform Commission said on Tuesday that China's cabinet had approved Intel's plan to invest $2.5 billion in a microchip plant in the northeastern city of Dalian.

By using 90-nanometre technology, the planned 12-inch wafer plant will have a monthly capacity of 52,000 chips. (Click [nPEK340082] for details)

But Chang expressed concerns about the process technology his company uses on the mainland at present.

"If we don't move further forward, Intel's products might be more advanced than us," said Chang, whose company uses 0.25-micron technology to produce chips in China.

Taiwan's government has approved an investment revision that allows local chip makers to export more advanced 0.18-micron technology to China to boost competition and manufacturing efficiency in the fast-growing China market.

Both 0.18- and 0.25-micron technology are several generations behind the state of the art. Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has been taking a front seat in driving process technology to 90-, 65- and 45-nanometre.

The smaller circuitry allows the design of more powerful chips for more complex devices, and the squeezing of more circuits onto a single chip also increases chip yield per wafer, boosting efficiency. In Taipei, TSMC's shares closed down 1.74 percent at T$67.90, underperforming a 1.48 percent drop on the main TAIEX share index .