Taiwan Semiconductor Manufacturing Co Ltd (TSMC) will break ground in mid-1996 on its first US foundry, a US$1.2 billion manufacturing joint-venture with Altera Corp of the US and other undisclosed partners.
"Our strategy is to expand capacity and to grow with the foundry marketplace, which is growing faster than the overall semiconductor market," said Ron Norris, TSMC's North American business manager. "We want to grow capacity to keep us in a leadership position."
Market research firm Dataquest Inc figures there will be 200 new fabs worldwide by the year 2000.
When the new joint venture plant is running at full capacity at the end of 1999, it alone should be contributing more than US$2 billion to the total world semiconductor revenue, which Dataquest estimated will top US$300 billion at that time.
Norris said it is critical for fabless semiconductor companies to secure capacity long term. To take advantage of growing demand for fabs, TSMC spent more than US$600 million last year to expand its fab capacity and plans to keep spending at an aggressive rate, Norris said.
TSMC, a US$1 billion company last year, already is the world's largest dedicated semiconductor manufacturer, producing more than one million 6-inch wafers per year in 1995 in Hsinchu, Taiwan. TSMC offers CMOS fabrication processes that focus on advanced logic, mixed signal and a wide array of memory processes. Its 6-inch fabs (Fabs 1, 2A and 2B) currently are running at full capacity, putting out 100,000 wafers per month. Fab 3, which started 8-inch wafer output in October of 1995, will be in volume production for a variety of customers ramping to full capacity of 30,000 8-inch wafers per month in 1996.
To expand its global presence, TSMC is planning to build other foundries in North America and Europe. The company planned to disclose the site of the US plant in March. Industry observers believe it is likely to be in Oregon, near other factories owned by Intel Corp and Integrated Device Technology.
The other partners, which like Altera are long-standing TSMC customers, will likely be revealed after the plant location is disclosed. There is no name yet for the new fab, which Norris said will be an independent legal entity.
The new fab will support the manufacturing requirements of TSMC's joint venture partners as well its foundry customers. It will focus on programmable logic, graphics, controllers and other logic products.
The plant, which will have a capacity of 30,000 8-inch wafers per month, is scheduled to begin production in the first half of 1998. The new fab initially will produce devices with 0.35µ design rules with the ability to migrate to 0.25µ devices. It will employ more than 900 people and should be running at full capacity by the end of 1999.
Though TSMC is the majority owner of the new joint plant, Altera will invest US$248 million as part of its strategy to raise wafer capacity through 2001. Last November Altera signed multiple agreements with TSMC including increased foundry wafer supply, advance deposit arrangements for future wafer purchases and the new joint venture wafer fab in the US.
Altera said the partnership with TSMC is a major part of its strategy to insure it has access to enough wafer capacity to support growth beyond US$2 billion in revenue by 2000. Altera committed US$123 million in cash and promisory notes for the new fab to be paid during 1995, 1996 and 1997 as prepayment for wafers. Altera has rights to own 16% of the joint-venture company and to take up to 24% of the new fab's capacity.
TSMC Business Manager Norris
Altera president Rodney Smith said his company, which also buys from Sharp Corp of Japan and Cypress Semiconductor Texas Inc of the US, needs to have ready supplies of chips.
"Our global supply strategy provides geographically diversified sourcing from Taiwan, Japan and the United States, thereby reducing sole source location risks and currency exposures," Smith said. "We believe that the arrangements we have made with TSMC will contribute substantial capacity that provides Altera with a strategic advantage in the marketplace." He said Altera will combine the advanced manufacturing capability of TSMC with its own design, architecture, software and market knowledge.
Smith said TSMC's leading-edge wafer manufacturing in both Taiwan and in the United States will help Altera move more quickly toward its goal of becoming a multi-billion dollar company.
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