On May 21, 1999, Taiwan Semiconductor Manufacturing Co. (TSMC) and Vanguard International Semiconductor announced plans for a joint venture to build a 300-mm wafer fab in Hsinchu, Taiwan. The proposed project was expected to cost about $2 billion, use a 0.13-micron process and begin volume production in 2002, with each company receiving access to half the fab’s capacity. Those were announced intentions, not confirmation that the facility was completed or operated on that timetable.
What the companies announced
The May 21, 1999 announcement described a joint venture for a new 300-mm wafer-processing plant in Hsinchu. Contemporary EE Times coverage reported these terms:
| Item | Announced plan |
|---|---|
| Partners | TSMC and Vanguard International Semiconductor |
| Location | Hsinchu, Taiwan |
| Estimated project cost | About $2 billion |
| Wafer format | 300 mm, also called 12 inches |
| Planned process | 0.13 micron |
| Construction start | Spring 2000 |
| Target for volume production | 2002 |
| Capacity access | 50% for TSMC and 50% for Vanguard |
The report also said TSMC held a 26% stake in Vanguard at the time. The capacity split does not establish equal equity ownership, equal capital contributions, or equal responsibility for operating costs. The available announcement does not specify those arrangements or identify the final legal structure of the venture. EE Times reported the announced terms.
Why moving to 300-mm wafers mattered
A 300-mm wafer is larger in diameter than the 200-mm, or 8-inch, format then used in many fabs. Its larger surface can accommodate more individual dies, but a fab cannot gain that scale simply by adapting an existing 200-mm line. The new format calls for specialized equipment, facilities and process control, making the transition a major capital and manufacturing undertaking.
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- The original value of un-polished wafer is above $500
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The announcement’s 0.13-micron target was a process-technology specification, not a description of wafer size. Nor does 300 mm mean that each chip would be 12 inches across: chips are made on the wafer and then separated. The contemporary reports supply no measured yield, output advantage or cost reduction for this proposed facility, so a precise productivity or savings figure cannot be attributed to it. The alternate EE Times account identifies the format as 300 mm, or 12 inches.
Why TSMC and Vanguard joined forces
Sharing the investment and capacity
EE Times described the partnership as a way to pool resources for the expense of a next-generation fab and give each company access to half its capacity. Vanguard had been considering a second 8-inch plant on the Hsinchu site; the joint-venture proposal replaced that plan with a larger-format project and a partner.
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- Wafer Pattern May Vary from the Product Images. Great to be used as gift, display object, exhibition, educating demonstration, testing, decoration or your collection
- Beautiful microchip pattern structure made by the advanced copper technology
- 90~130nm minimum microchip feature Copper Characterization with TEOS or Black Diamond Low-k ILD on the single crystal silicon wafer
- The original value of un-polished wafer is above $500
- No guarantee for research and other applications
That arrangement offered Vanguard a way to pursue additional manufacturing capacity without shouldering the proposed project alone. Describing this as a hedge against the risks of investing in a cyclical memory business is a reasonable interpretation of the deal, but the report does not present it as a formal company rationale or disclose the financing structure.
Different businesses, shared manufacturing interests
In 1999, TSMC was described as the world’s largest dedicated IC-wafer foundry: it manufactured chips for customers rather than primarily selling its own branded semiconductor products. Vanguard, by contrast, was a Taiwan-based DRAM producer making 16- and 64-Mbit memory products and operating an 8-inch fab in Hsinchu.
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- 5 x 5 inches, 0.67 ounces, 0.03 inches thick. Some wafers are marked with alignment marks.
- The pattern is produced by light diffraction, and its reflective appearance changes with the viewing angle.
- Silicon wafers are fragile—please handle with care.
- Circuit details can be examined under a microscope.
The National Academies’ history places Vanguard within Taiwan’s broader industrial development: the company was spun off from the Industrial Technology Research Institute (ITRI) in 1994, with TSMC and Taiwan’s Executive Yuan Development Fund among its major investors. The account says Vanguard later shifted toward the pure-play foundry model in the early 2000s. That later business transition provides context for the partnership, but it does not establish what became of this particular proposed fab. The National Academies outlines Vanguard’s origins and later direction.
Why Hsinchu was notable in the Tainan debate
The project was announced for Hsinchu even though TSMC had previously discussed a 300-mm fab as part of an $18 billion investment in a new science park in Tainan. Hsinchu was already home to Vanguard’s operating 8-inch fab and an established semiconductor cluster; Tainan represented a major expansion area.
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Contemporary analysts questioned whether the Tainan science park was advancing quickly enough and raised concerns about water and electricity for several large fabs. Those were reported concerns at the time, not proof that Tainan was incapable of supporting semiconductor manufacturing. The location contrast illustrates how site readiness, infrastructure and schedule risk could weigh alongside technology and investment strategy. EE Times covered the Hsinchu plan and the earlier Tainan proposal.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How the proposal fit TSMC’s expansion plans
The 1999 report placed the proposed joint venture alongside several other TSMC targets. These figures were forecasts made at the time, not verified production results:
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- TSMC planned to offer 0.15-micron technology in 2000 and expected to offer 0.13-micron technology by 2001.
- The company projected worldwide capacity to rise from 1.8 million wafers in 1999 to 3.42 million in 2002, measured on an 8-inch-equivalent basis.
- TSMC’s WaferTech joint venture in Camas, Washington, was projected to reach 30,000–35,000 wafers per month by the end of 2001.
- For its 8-inch Tainan Fab 6, TSMC planned to install equipment in the fourth quarter of 1999 and expected volume production in April 2000. The report described two modules and total planned capacity of 60,000 wafers per month.
These projections show that the Hsinchu venture was part of a broader capacity and technology expansion, rather than an isolated announcement. The report does not establish whether each target was subsequently met. The contemporary report lists these plans and projections.
What is known about the fab’s eventual outcome
The available contemporary coverage documents the proposal and its intended schedule; it does not establish whether construction began in spring 2000, volume production started in 2002, or the project was completed, cancelled, redesigned or absorbed into another manufacturing operation. It also does not verify the eventual process node, capacity, equipment suppliers or amounts invested by either company.
For that reason, “Taiwan’s first 300-mm fab” should be read here as the description attached to the announced project, not as proof that this specific facility became Taiwan’s first operational 300-mm fab. The National Academies later recorded that Taiwan had 11 state-of-the-art 12-inch fabs by 2007, evidence of the country’s subsequent expansion but not of this venture’s fate. The National Academies provides the later 2007 figure.
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