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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (48148)	6/19/2001 8:13:54 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

Taiwan Fabs Expand Horizons The high concentration of IC fabs in Taiwan's Hsinchu Science-Based Industrial Park (HSIP) has been one of the major reasons for its prosperity. "The success of Taiwan's fabs lies partially in the close proximity of all the necessary materials and other supporting infrastructure components needed by a modern fab," said Morris Chang, chairman of TSMC. "The high concentration of engineering talent in Hsinchu also allows for a quick dissemination of new techniques and ideas." With over 10% of the world's output of ICs concentrated amongst 30 fabs in one location though, any breakdown in the power, water and other physical infrastructure requirements for IC production could be costly and potentially catastrophic. Power outages, a chronic lack of water and overcrowded roads have caused costly temporary delays and shutdowns for years at the HSIP. Sitting atop a major earthquake fault, the ever present possibility of severe earthquake damage is a reality. For years, high level executives at Taiwan's fabs have quietly admitted that the infrastructure of the HSIP has become overtaxed and that other locations need to be found. Beginning in late 1999 and still in process, the Taiwanese began to set up fabs in other countries. The high concentration of fabs in a Science Park with deteriorating infrastructure is also a major concern for Taiwan's IC fab customers. "Our customers were asking us to geographically diversify our operations," said Alex Hinnawi, special assistant to the chairman of UMC. Overseas Options What sparked off the recent move now also has a great deal to do with financial considerations. By going offshore, the Taiwanese have been able to get their overseas partners to foot a large percentage of the costs of a new facility. In 1999, UMC was able to buy Nippon Steel's failing Japanese fab for a few hundred million dollars. The decision by UMC and TSMC to put fabs in Singapore now is also largely due to the attractive assistance package they received from the Singapore government. "We received a ten-year tax holiday from the Singapore government as well as some investment capital," said Hinnawi. "The government in Singapore is also providing us with the roads, water and power we need." While Japan and Singapore may offer attractive financial deals, they also have negatives. "Fixed costs are higher in Japan and Singapore than they are in Taiwan," said Hinnawi. "In Singapore, there is also a shortage of local engineering talent. The Singapore government will allow us to bring in foreign engineers though." A further downside for Singapore is its politically precarious infrastructure. About 40% of Singapore's water is bought from Malaysia, as is some of its power. The move by the Taiwanese and others to open IC foundries in places other than Taiwan does not mark the downfall of Taiwan's IC fab industry. It does however point to a trend where the Taiwanese export their IC fabrication engineering and management expertise to fabs located in other countries. by David Baldwin, Taipei (June 2001 Issue, Nikkei Electronics Asia)