Menu
China's chip investments potentially more good than bad for TSMC

China's chip investments potentially more good than bad for TSMC

TSMC is hoping it has more to gain than lose from China's investments into its local semiconductor industry

Taiwan Semiconductor Manufacturing Co. is putting a positive spin on China's investments aimed at making its chip industry a competitive, global powerhouse.

"We think our business opportunity in China will grow, will be bigger, with this development," said Mark Liu, co-CEO of TSMC during a conference call to discuss earnings.

This week, China announced it had set up a fund to develop the country's semiconductor industry, with local media reporting that the initial investments could amount to 120 billion yuan (US$19.5 billion). The announcement came after the Chinese government in June unveiled a plan to turn the country into a leading semiconductor maker.

The government investment comes at a time when China has become a major market for electronics, but still imports vast amounts of chips made from foreign companies including Intel, Samsung and contract-chip manufacturer TSMC. China wants to change that, by increasing local chip production and pushing domestic manufacturers to develop new semiconductor technology.

The government subsidies could force some of TSMC's Chinese clients to use local chip foundries to build their processors, Liu said on Thursday. But on the plus side, many of China's chip designers have historically chosen TSMC foundries that have cutting-edge manufacturing technologies.

"We will be ready to capture the business," Liu said. He added that the government subsidies could help Chinese chip designers expand their business, and even lead to mergers. Companies such as Allwinner, Rockchip, Spreadtrum are among the emerging Chinese chip designers that are developing processors for smartphones and tablets.

A report from consulting firm McKinsey and Co. estimated that over the next five to 10 years, China could end up providing up to 1 trillion yuan in financial support to prop up China's semiconductor industry.

TSMC's existing business, however, remains strong, and has shown consistent growth on booming demand for smartphones. On Thursday, the company reported record net profit of NT$76.3 billion (US$2.5 billion) in the third quarter, up 47 percent year-over-year. For this year, TSMC estimates it will make a little over 50 percent of its revenue from producing smartphone chips.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags regulationComponentsprocessorsgovernmentTaiwan Semiconductor Manufacturing Co.

Slideshows

Meet the leading HP partners in New Zealand...

Meet the leading HP partners in New Zealand...

HP has recognised its top performing partners in New Zealand at the second annual 2016 HP Partner Awards, held at a glittering bash in Auckland. The HP Partner Awards recognises and celebrates excellence, growth, consistency and engagement of its top partners. This year also saw the addition of several new categories, resulting in 11 companies winning across 11 award categories.

Meet the leading HP partners in New Zealand...
Channel comes together as Ingram Micro Showcase hits Auckland

Channel comes together as Ingram Micro Showcase hits Auckland

Ingram Micro outlined its core focuses for 2017 at Showcase in Auckland, bringing together the channel for a day of engaging keynotes, compelling breakout sessions and new technologies.

Channel comes together as Ingram Micro Showcase hits Auckland
Show Comments