TSMC sees no threat from China chips

HONG KONG, China (CNN) -- Taiwan now forbids investment in strategic industries in China, including chip making.

There are worries in some quarters that lifting the chip ban would result in Taiwan losing jobs, but other industry observers say a move to the Mainland is inevitable.

Taipei will unveil its position on the ban by the end of this month.

Already, one company has set up shop in China. Taiwan Semiconductor, the world's largest chip foundry, established a liaison office there late last year.

TSMC has been silent on the chip ban but CNN correspondent Kristie Lu Stout asked its CFO, Harvey Chang, about the company's ambitions in China.

HARVEY CHANG:

Kristie, we really cannot talk about it. This is the focus of the political issue in Taiwan. We have very clear instructions. We just have to be silent. No matter how unpolitical our angle is, we have to be 100 percent silent on this.

KRISTIE LU STOUT:

A question about competition -- China has a fledgling chip sector with players such as SMIC and Grace Semiconductor. Both are also Taiwan-backed chipmakers. How do the Taiwan foundries such as TSMC regard these emerging competitors?

HARVEY CHANG:

It actually takes many different resources to become a competent foundry. For example, we have already moved our business focus from the initial capacity focus gradually to a manufacturing performance focus. Now we are focusing on total solutions. It takes a much bigger platform to provide not only the capacity, but also the technology, also the design service, and the turnkey service to customers. For the newcomers to the industry, I think they have a lot to catch up. So I think at this point, these emerging players, they are not really concerned competitors for the time being.

KRISTIE LU STOUT:

How does a Micron-Hynix merger change the game for the chip sector?

HARVEY CHANG:

I think if they can successfully work out a deal, I think it will be more stability for the semiconductor industry. Although DRAM and the foundry are not in the same business, a more stable DRAM price usually helps the recovery of the semiconductor industry.

KRISTIE LU STOUT:

You recently announced that TSMC would see a first quarter growth of around 5 to 10 percent. What is fueling that growth?

HARVEY CHANG:

Actually, the growth momentum started in the fourth quarter last year. That momentum carried us into the first quarter. But as we are about the leave the quarter now, we see the demand from the customers. Most of these demands are already turning into orders and turning into revenues. So actually at this point, we can comfortably say that we will be on target in terms of sequential growth from last quarter. But more importantly I think we also see the momentum picking up. So we will see a stronger growth momentum into next quarter.