Chipmakers For Hire: The Next Big Leap

TSMC and other Asian freelancers plan a host of new plants

There was a lot of scoffing a decade ago when Morris Chang persuaded the government of Taiwan to help him build the world's first silicon wafer plant devoted entirely to contract work for foreign semiconductor makers. Skeptics doubted that the investment would ever pay off. Instead, Chang's Taiwan Semiconductor Manufacturing Co. revolutionized an entire industry. Freed from the financial burden of having to build their own wafer fabs, dozens of highflying Silicon Valley chip houses were able to rush into fast-growing and lucrative markets because they could get their designs etched onto silicon at TSMC. With four wafer plants operating at full capacity, TSMC expects profits to hit $535 million this year on sales of $1.5 billion.

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