The Shanghai branch of the Taiwan Semiconductor Manufacturing Company Ltd. (TSMC), the leading chip maker in Taiwan, is expected to be operational in the fourth quarter next year, according to a local official.

The branch is the Taiwan-based chip giant's first investment in the Chinese mainland, said Wang Wentao, deputy head of Shanghai's Songjiang District, where the branch is located.

According to TSMC's plan, the total investment in the Shanghai branch will amount to 10 billion US dollars in 10 years, and so far over 1 billion US dollars has been used in the first phase of construction.

Wang said the infrastructure is now being built, and the construction of workshops started one month ago. The installing and testing of the equipment will finish by mid-2004, and small production will begin in the last quarter of next year.

Eight-inch wafers will be the main product of the first phase of the Shanghai branch. The round chips are widely used in the manufacturing of CPUs, video adapters and mobile phones. Its monthly output is expected to be over 40,000 pieces when it is fully completed, according to Wang.

Wu Xudong, TSMC's chief representative in Shanghai, predicted good prospects in the mainland chip market, saying that after two years' recession in the international integrated circuit (IC) market, finally there is a revival.

Wu said that in view of the stable and booming IC development in the mainland, especially the increasing need for a chip processing industry in Yangtze River Delta where the number of IC design companies is growing fast.

TSMC will focus on the mainland market, Wu added.

Founded in 1987, TSMC enjoys 40 percent market share of the world chip processing business, according to Wu.