Taiwan Semiconductor Manufacturing Corp (TSMC), the world's largest manufacturer of made-to-order computer chips, will invest US$10 billion in Shanghai's Songjiang District over the coming decade, local authorities said.

"The deal has been agreed and the total chip-making investment (by TSMC) will be no less than US$10 billion," Wang Wentao, the district's vice-governor, said at an investment fair held at the weekend.

Wang, who is in charge of the district's industrial planning, added that such huge investment will be made in stages.

The vice-governor's announcement was the first time that the local authorities had confirmed TCMC's overall investment plan for the Chinese mainland, investment that the Taiwan authorities had very much tried to discourage.

According to authorities in Shanghai, TSMC's Shanghai factory involves initial investment of US$1.11 billion and will start production in the fourth quarter of next year, with monthly production of 30,000 200-millimetre (8-inch) chips.

The construction of the first batch of workshops was completed by the end of last month and the trial runs of the Shanghai factory's chip-manufacturing facilities will be finished by next June, said Wang.

TSMC Chairman Morris Chang told media in Taipei that the 200-millimetre chips will be the main products made at the corporation's Shanghai plant, targeting the fast-growing consumer electronics integrated-circuit (IC) market.

As the mainland increasingly becomes a world-leading manufacturing base for electronics, demand will surge for IC products, especially in the personal-computer and cell-phone sectors, said Lin Jing, a senior IC engineer with the Shanghai Zhangjiang High-Tech Park.

Despite the global slowdown in the information-technology industry, the mainland's semiconductor market expanded to 112 billion yuan (US$13.5 billion) last year, up 29 per cent over the previous year, according to the Ministry of the Information Industry.

Around 80 per cent of the chips used on the mainland are imported, according to the ministry.

Shanghai is currently the mainland's leading semiconductor manufacturing base.

According to statistics from the Shanghai Integrated-Circuits Industry Association, Shanghai has built seven chip-production lines, including three for the internationally prevalent 200-millimetre chips. Another four 200-millimetre chip-production lines are under construction.

The Shanghai Zhangjiang High-Tech Park, in the city's Pudong New Area, has become the mainland's largest and most advanced chip-manufacturing base, hosting 66 chip-related companies with combined investment of US$8 billion, according to the latest statistics from the industry association.

A complete IC industry chain has been formed in the park, covering manufacturing, research and development, sealing, packaging and testing.