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Powerchip to build $9bn chip manufacturing plants in Taiwan

Founder and CEO says island's chip sector continues to outperform China

Taiwanese chipmaker Powerchip says it will invest $9.03 billion to build two more chip facilities in Taiwan. (Photo by Lauly Li)

TAIPEI -- Taiwanese chipmaker Powerchip on Monday said it planned to invest 278 billion New Taiwan dollars ($9.03 billion) to build two more plants on the island for the manufacture of 12-inch chips as part of the company’s strategy to bolster its foundry business and return to the stock market by 2020.  

The planned investment will bring the total number of Powerchip’s 12-inch chip facilities in Taiwan to five, with a combined production capacity of 200,000 wafers per month by 2030, up from the current 100,000, according to the chipmaker. 

Powerchip’s two new chip facilities will both be located in the Tongluo Industrial Park in northern Taiwan’s Miaoli City, close to chip testing and packaging service provider King Yuan Electronics’ new plant. Phase-one construction of Powerchip’s NT$278 billion project is scheduled to start in 2022 and the project will create 2,700 jobs in total, the company said.

“The cluster of Taiwan’s chip sector is much stronger than in China,” Powerchip founder and Chief Executive Frank Huang said at a press conference in Taipei. 

Huang said that the overall investment environment and competitiveness in Taiwan was still strong, even though Powerchip invested in a chip facility in China. “For instance, in Taiwan, we do not need to worry about wiring money out from the country,” he said.

The new capacity will meet robust demand for driver integrated circuits and power management ICs. It will also make advanced artificial intelligence memory chips, automotive chips and biochips, such as gene chips. “This next generation chip technology will definitely stay in Taiwan and will not transfer to China,” Huang said.

Powerchip has a 12-inch wafer plant in Hefei, in China’s Anhui province. The facility is operated by Nexchip Semiconductor, a joint venture formed by Powerchip and the Hefei City Government in 2015. The chip facility became operational in 2017 and it mainly supplies liquid crystal display driver ICs to flat panel makers like BOE Technology Group. The Hefei facility produces 20,000 wafers per month and Powerchip currently does not plan to expand capacity there, according to the Taiwanese chipmaker.

Huang said China might be taking an aggressive approach to developing its own semiconductor industry, but Taiwan has an edge in the advanced chip technology. “With leading chipmakers like [Taiwan Semiconductor Manufacturing Co.] staying here, I am not worried about Taiwan’s semiconductor industry.”

Powerchip delisted from the Taiwan Stock Exchange in 2012 when its book value plunged due to severe headwinds in the DRAM industry. Over the years, the company has shifted its focus to the foundry business for driver ICs, power management ICs and niche memory chips for other companies. 

The foundry business now contributes some 50% of the company’s total revenue, and the company’s net profit last year exceeded NT$8 billion, according to Powerchip. The company said its goal of returning to the stock market remained unchanged, with the aim of listing again by 2020 at the earliest.

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