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Taiwan Semiconductor Manufacturing Company Ltd. Business Information, Profile, and History

121 Park Avenue III
Science-Based Industrial Park
Hsinchu 300
Taiwan

Company Perspectives:

TSMC created the semiconductor dedicated foundry industry when it was founded in 1987. It continues as the market leader by steadily increasing its capital spending and by outperforming all other market competitors.

History of Taiwan Semiconductor Manufacturing Company Ltd.

When Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) was founded in 1987, it was a novel concept to have a dedicated foundry that produced microchips for other semiconductor companies. At the time, chips typically were produced in-house by giant integrated device manufacturers (IMDs) such as Intel Corp. and NEC Corp. When those companies had excess production capacity, they produced chips for other semiconductor design houses. With the advent of dedicated semiconductor foundries to supply design houses, TSMC and other foundries have paved the way for the development of fabless semiconductor companies that are strong on design but cannot afford the investment required for fabrication facilities.

Transforming Taiwan's Semiconductor Industry: 1987-92

Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) was formed in 1987 as a joint venture between the Taiwan government, which wanted to promote the development of the island's semiconductor industry, and Philips Electronics NV of The Netherlands. The company was set up by Morris Chang, who had been invited by the Taiwan government in 1985 to come to the island and help grow its semiconductor industry. Chang was born in China and educated at the Massachusetts Institute of Technology (MIT) and Stanford, where he earned a doctorate in electrical engineering. He was the president of General Instrument Corp. when he left to go to Taiwan.

When TSMC was founded in 1987, it was a major catalyst in transforming Taiwan's semiconductor industry. It provided state-of-the-art manufacturing processes that complemented Taiwan's strength in chip design. Between 1987 and 1992 TSMC gradually added to its foundry capacity by vertically integrating into related disciplines, including wafer sort testing in 1988, mask-making in 1990, and design services utilizing technology licensed from VLSI Technology in 1991. It also improved its process technology. After starting as a six-inch, 2-micron wafer-processing fabrication facility, or fab, it broke the 1-micron barrier in 1991.

TSMC originally was intended to service Taiwan's design houses, which were noted for their chip designs but did not want to get involved in manufacturing processes. TSMC, however, soon became an internationally oriented, profit-driven organization that supported the development of fabless semiconductor companies, that is, that did not own their own manufacturing facilities. Fabless semiconductor companies were strong on design, but they could not afford the large investment required to build their own fabrication facilities.

By 1992 TSMC was rated as the world's top silicon foundry, producing chips for other companies. TSMC employed 250 process engineers and was on the cutting edge of process technology. TSMC accounted for 80 percent of Taiwan's production of SRAM and also produced a variety of other semiconductor chips, including DRAM and EPROM. Revenue for 1992 was around $245 million.

Building New Facilities to Expand Capacity: 1994-96

By 1994 demand for chips was exploding with new applications in multimedia and portable computing. At the beginning of the year TSMC announced plans to build a new eight-inch wafer fabrication facility, or fab, that would double the company's output to more than $1 billion worth of product a year. The new plant was the company's third fabrication facility and cost about $800 million to build. At the time TSMC was running several different processes for both logic and memory chips, and the company was running out of capacity.

In September 1994 TSMC went public on the Taiwan Stock Exchange. Before the end of the year TSMC announced an agreement with Advanced Micro Devices Inc. (AMD) to provide foundry services for AMD's AM486 processors. For 1994 TSMC reported sales of $744 million and net income of $325 million. A 60 percent increase of worldwide semiconductor sales between 1992 and 1994 resulted in a global shortage of wafer fabrication capacity. About 60 percent of TSMC's sales were to fabless semiconductor companies, with the remaining 40 percent going to companies short of manufacturing capacity. TSMC's gross margin of 49 percent was the highest in the semiconductor industry.

In March 1995 TSMC announced that it would build another eight-inch wafer fab at a cost of $1.2 billion. The new plant, TSMC's fourth fab, was designed to operate at 0.4-micron initially and later at 0.25-micron, which was about one generation ahead of the eight-inch 0.5- to 0.35-micron plants proposed by other Taiwan semiconductor manufacturers. Construction on the new eight-inch fab began in November 1995. Some of the funding for the plant came from deposits that customers made to ensure long-term fab capacity, an option that TSMC began offering to customers in mid-1995.

Between 1993 and 1995 TSMC nearly doubled its capacity to produce six-inch (150mm) wafers, from 665,000 wafers in 1993 to 1.2 million in 1995. Its six-inch fabs, including Fab 1, Fab 2A, and Fab 2B, were running at full capacity, producing 100,000 wafers per month. Fab 3, which produced eight-inch wafers, was expected to ramp to full capacity of 22,000 wafers per month in 1997 and 35,000 per month in 1998. Fab 4 was expected to come online in 1997 and ramp to full capacity of 25,000 eight-inch wafers per month in 1998. The construction of Fab 5 in Hsinchu was announced before the end of 1995.

In November 1995 TSMC and Altera Corp. announced a joint venture to build a wafer fabrication plant in the United States. After considering sites in Oregon and British Columbia, TSMC selected Camas, Washington, for the $1.2 billion plant. The plant would have the capacity of producing 30,000 eight-inch wafers per month, starting with line geometries of 0.35-micron and then migrating to 0.25-micron. By mid-1996 TSMC had signed on two more joint venture partners for the plant, to be called WaferTech; they were Analog Devices and Integrated Silicon Solutions Inc. (ISSI). Altera's $140 million investment gave it 18 percent ownership of WaferTech. Analog Devices also owned 18 percent, ISSI owned 4 percent, private investors owned 3 percent, and TSMC owned 57 percent.

At the end of April 1996 TSMC became the first Taiwanese company to be listed on the New York Stock Exchange when it raised more than $500 million through the sale of 305 million ADR (American depository receipt) shares. At the time Philips Electronics owned about 35 percent of TSMC. For 1996 TSMC reported sales of $1.45 billion and net income of $718.5 million.

Facing Challenges in 1997

TSMC began 1997 anticipating a sales decline and a 50 percent drop in profits. The company announced it would cut prices due to excess capacity and fierce competition. United Microelectronics Corp. (UMC) of Taiwan recently had replaced longtime competitor Chartered Semiconductor Manufacturing Pte. Ltd. of Singapore as TSMC's primary rival by forming three independent foundry ventures in the past 18 months with several North American design houses. UMC also was aggressively cutting its prices. In March 1997 Donald Brooks, who had been TSMC's president since 1991, resigned and was replaced by TSMC Chairman Morris Chang. Brooks subsequently joined TSMC rival United Microelectronics as president of its new International Operation unit, based in Sunnyvale, California.

Around this time TSMC announced an ambitious, ten-year expansion program that called for an investment of $14.5 billion in the construction of six eight-inch and 12-inch (300mm) fabrication facilities as well as other facilities. The company also announced a long-term commitment with the local Tainan government to establish a new Science-Based Industrial Park in Tainan in the southern portion of Taiwan. TSMC planned to construct Fab 6 there at a cost of $1.4 billion, starting in mid-1997. As the company had announced before, it had run out of space to expand at Hsinchu.

By mid-1997 TSMC was fully booked for the remainder of the year. It was experiencing strong demand from customers in the PC, consumer electronics, and communication IC (integrated circuit) sectors. It also was ramping up production for Japan's Fujitsu Ltd. as part of a deal signed in 1996.

In spite of the downturn in semiconductor demand in 1996, TSMC continued to be generous with its employees. Employees who worked for TSMC in 1996 received an employee-dividend distribution worth more than $100,000 per employee. TSMC transferred some 100 million shares of stock to the more than 4,000 employees who worked for the company in 1996. At the time TSMC stock was trading between $5 and $6 a share. For 1997 TSMC reported revenue of $1.37 billion as it continued to be the leader in the semiconductor foundry industry.

Semiconductor Sales Down in 1998

Although the forecast for 1998 called for sluggish growth in the global semiconductor industry, TSMC was fully booked for the first quarter and announced that it would increase its eight-inch wafer production by 40 percent to 1.67 million units for the year. The company planned to ramp up production at two eight-inch fabs and begin construction on several more plants, including two at Taiwan's new scientific industrial park at Tainan. WaferTech was scheduled to begin production mid-year.

In the first quarter of 1998 TSMC entered into a licensing agreement with intellectual property (IP) vendor Artisan Components of San Jose, California. Under the agreement, TSMC would license Artisan's intellectual property and offer it directly to its foundry customers exclusively. The IP that Artisan would create for TSMC included memories, standard cells, and I/O (input/output) for its 0.25-micron process technology. The arrangements reflected the value of having foundry-ready IP available to customers to put into their own designs. TSMC began making Artisan's IP library available to its foundry customers in the second half of the year.

By mid-1998 the semiconductor manufacturing industry was experiencing considerable weakness, with an erosion in both prices and demand. TSMC was operating at 80 percent capacity after starting the year at full capacity. As a result, the company announced that it would cut its capital spending budget for 1998 from $1.3 billion to $920 million and projected that it would spend $800-$900 million in 1999. The company named a new president, F.C. Tseng, and announced plans to offer a copper-metallization process and move to 0.18-micron process technology in 1999. According to Electronic Engineering Times, TSMC was pushing its process technology at a rate that appeared to match its larger rivals, including Intel Corp., IBM, and NEC Corp.

Following its successful strategy of building for the future, TSMC entered into an agreement with Philips Electronics and EDB Investment of Singapore to build a $1.2 billion, joint venture fabrication facility in Singapore's Pasir Ris Wafer Fab Park in 1999.

The company realigned its international management team in October 1998. Ron Norris, president of TSMC's U.S. subsidiary based in San Jose, was promoted to senior vice-president of worldwide sales and marketing and relocated to the company's headquarters in Taiwan. Magnus Ryde, formerly vice-president of worldwide field operations at semiconductor manufacturing equipment maker KLA-Tencor Corp., was named the new president of TSMC-USA.

For 1998 TSMC's revenue reached $1.56 billion, a 14.6 percent increase over 1997. Profits declined, however, from $559.5 million in 1997 to $477.9 million in 1998.

Continuing to Seek Additional Capacity in 1999

TSMC's capital spending plans went through several revisions in 1999. Although sales declined in the second half of 1998, the company expected that results for 1999 would improve. With strong demand for its 0.25-micron wafers, TSMC's first quarter was significantly better than the first quarter of 1998. In February the company announced an agreement with Motorola, which was in the process of outsourcing up to 35 percent of its semiconductor production. Under the agreement TSMC would use Motorola's 0.25-micron and 0.35-micron CMOS logic processes, which typically were used for making microcontrollers, while Motorola would gain access to TSMC's technology at similar micron levels.

With TSMC making progress on 0.18-micron process technology, the company raised its capital spending budget for 1999 to $1.26 billion. The increase was intended to support the ramp-up of 0.18-micron capacity in Taiwan and later in the year at WaferTech. The company also was moving forward with copper-interconnect technology and planned to begin volume production in 2000. With orders for semiconductor capital equipment accelerating, the semiconductor foundry industry was again pursuing additional capacity. TSMC and its affiliate Vanguard International Semiconductor Corp. formed a $2 billion joint venture to build Taiwan's first 300mm-wafer fab. Construction began in 2000, with volume production slated for 2002.

In June TSMC invested $170 million in Acer Semiconductor Manufacturing Inc. (ASMI), about 30 percent of the company's shares. ASMI, a subsidiary of Taiwan computer company Acer Inc., manufactured chips in its foundry for IBM Microelectronics and Fujitsu Ltd. As part of its investment in ASMI, TSMC would provide its full support to transform ASMI into a dedicated foundry. TSMC also would manage the newly formed corporation, renamed TSMC-Acer Semiconductor Corp., with TSMC President F.C. Tseng as TSMC-Acer's chairman.

TSMC's sales and income in the second quarter of 1999 were the best it ever had, and sales in July 1999 were more than double those of July 1998. While the company was considering building a fabrication facility in Europe, it was concentrating its capacity-building efforts on its joint venture fab with Philips in Singapore and converting Acer into a dedicated foundry.

In September 1999 Taiwan suffered an earthquake that was the largest in the island's history. Following the quake TSMC issued status reports to its customers and formed a special task force to keep its customers informed of the status of their orders. The company also donated $7 million to relief efforts. Power on the island was fully restored within a week and almost all of the island's fabs were fully operational. After the recovery TSMC was functioning at 90 percent capacity.

As 1999 drew to a close, TSMC was experiencing wafer demand about 80 percent higher than in 1998. For 2000 the company predicted greater demand than supply and would be hard pressed to maintain its goal to have 10 percent more capacity than demand. With TSMC experiencing strong demand throughout 1999, the company reported sales of $2.35 billion and net income of $792 million. The firm's profit margin was about 33 percent.

Acquisitions Boosting Capacity in 2000

Just before the end of 1999 TSMC broke ground on the construction of its first 300mm-wafer processing plant, called Fab 12, in Taiwan. Fab 12 was scheduled to begin production in 2002. The company was planning to invest $2 billion in Fab 12, which would serve both as a fabrication base and a leading-edge research and development center.

In January 2000 TSMC completed its acquisition of TSMC-Acer, paying about $90 million for the remaining 70 percent interest in the company. The purchase gave TSMC access to more than 40,000 wafers per month of production. In the same month TSMC acquired Worldwide Semiconductor Manufacturing Co. (WSMC) for $550 million in stock. Established in 1996, WSMC was Taiwan's third largest foundry. It operated one eight-inch fab using 0.25-micron and 0.18-micron process technologies and had a second eight-inch wafer fab that would begin production in March 2000. TSMC estimated that the acquisition of TSMC-Acer and WSMC would result in an increase in production from 2.8 million eight-inch wafers to 3.4 million in 2000.

Through alliances with more than 40 library, semiconductor intellectual property, and design service companies, TSMC was able to offer a wide array of services directly to system-on-a-chip (SOC) designers. The company created a common Design-Service-Alliance umbrella to offer original equipment manufacturers (OEMs) and integrated device manufacturers (IDMs) end-to-end solutions at a lower cost than could be achieved by internal design teams or other partners. At the time IDMs accounted for 27 percent of TSMC's revenue, and OEMs accounted for just 3 percent.

At the end of March 2000 TSMC formally opened its Fab 6 in Tainan's Science-Based Industrial Park. It was the first of six fabs TSMC planned to build there and was part of a $4.4 billion capacity expansion program that would help double TSMC's sales in 2000. Fab 6 was TSMC's last eight-inch wafer facility; subsequent fabs would use 12-inch wafers.

In the second half of 2000 TSMC entered into a licensing agreement with National Semiconductor Corp. of Santa Clara, California. The deal marked the first time that a pure-play foundry licensed its process technology to a major integrated device manufacturer (IDM). Under the licensing agreement National would implement TSMC's technology at its South Portland, Maine fabrication plant only.

TSMC also completed its mergers with TSMC-Acer Semiconductor Manufacturing Co. and Worldwide Semiconductor Manufacturing Co., giving it a workforce of more than 13,000 employees. Once the company realized its customers required substantially increased capacity, TSMC moved quickly to support that demand. After reporting record sales of $2.1 billion for the first half of 2000, TSMC announced that its foundry capacity was fully booked through the end of 2001. For the year 2000 TSMC reported revenue of $5.3 billion, up 131 percent over 1999 sales, and profits of $1.9 billion.

Before the end of 2000 TSMC's joint venture fab in Singapore with Philips Electronics began producing its first silicon. The two companies also strengthened their alliance, with Philips acquiring $420 million worth of TSMC's preferred stock. In addition, the two companies renewed their cross-licensing agreements. In November TSMC announced that it would take full control of WaferTech in Camas, Washington, by buying out its joint venture partners there at a cost not to exceed $500 million. TSMC also continued to improve its process technology, developing a 0.13-micron test chip before the end of the year and becoming the first silicon foundry to begin shipping 300mm wafers. The 300mm wafers were produced at Fab 6 in Tainan, Taiwan.

Surplus of Global Capacity: 2001

During the first quarter of 2001 TSMC reduced its capital spending budget a couple of times, finally setting it at $2.1 billion for the year. Principal rival United Microelectronics Corp. also cut its capital expenditures for 2001 to $1.5 billion, down from $2.8 billion in 2000. TSMC cited lower demand for processed wafers in lowering its budget. During the first quarter TSMC was running at 70 percent of capacity, and in April the company announced that it would cut its production output to 50 percent of capacity. By mid-year both TSMC and UMC were running at about 45 percent of capacity, and TSMC announced that it would delay construction of two 300mm fabs that it had planned to build in 2001.

While production was down, TSMC continued with its efforts to improve its process technology. It appointed its first chief technology officer, Dr. Chenming Hu, a well-known scientist in the field of semiconductors. In August the first 300mm wafers for customers were produced at TSMC's Fab 12. The company also made some executive management changes, promoting Dr. F.C. Tseng to deputy chief executive officer and naming Dr. Rick Tsai as president and chief operating officer. Dr. Morris Chang remained the company's chairman and CEO.

The outlook for semiconductor demand began to improve in the fourth quarter of 2001, and TSMC announced plans to spend $20.2 billion to build six silicon wafer plants in Taiwan. With sales up in the fourth quarter, the company was running at nearly 50 percent of capacity, compared with 41 percent during the third quarter. For the year 2001 TSMC had sales of $3.6 billion, a decline of 24 percent over 2000, and profits of $378 million. For 2002 TSMC expected the momentum to continue, with utilization rates for the first quarter around 60 percent.

Principal Subsidiaries: TSMC North America; System on Silicon Manufacturing Co. Pte. Ltd. (Singapore; 50%); Vanguard International Semiconductor Corp. (Taiwan; 25%).

Principal Competitors: Advanced Semiconductor Manufacturing Corp.; Chartered Semiconductor Manufacturing Pte. Ltd.; Intel Corp.; NEC Corp.; Newport Wafer Fabrication Ltd.; Tower Semiconductor Ltd.; United Microelectronics Corp.

Related information about Taiwan

Official name Republic of China

Local name T'aiwan Timezone GMT +8 Area 36 000 km²/13 896 sq mi population total (2002e) 22 457 000 Status Republic Date of independence 1949 Capital Taipei Languages Mandarin Chinese (official), various dialects including Taiwanese and Hakka also spoken Ethnic groups Han Chinese (98%), small (Polynesian) aboriginal minority Religions Taoist, Buddhist, Christian (Protestant and Roman Catholic) Physical features Consists of Taiwan I and several smaller islands c.130 km/80 mi off the SE coast of mainland China; mountain range runs N–S, covering two-thirds of the island; highest peak, Yu Shan 3997 m/13 113 ft; low-lying land mainly in the W; crossed by the Tropic of Cancer. Climate Tropical monsoon-type climate; hot, humid summers, mild, short winters; wet season (May–Sep); typhoons common (Jul–Sep); average daily temperature 12–19°C (Jan), 24–33°C (Jul) in Taibei; average annual rainfall 2500 mm/98 in. Currency 1 New Taiwan Dollar (TWD) = 100 cents Economy Progressed from agriculture to industry since 1950s; high technology, textiles, electronics, plastics, petrochemicals, machinery; natural gas, limestone, marble, asbestos; sugar, bananas, pineapples, citrus fruits, vegetables, tea, fish; affected by SARS outbreak, 2003. GDP (2001e) $386 bn, per capita $17 200 History Taiwan (Formosa) visited by the Portuguese, 1590; conquered by Manchus, 17th-c; ceded to Japan following Sino-Japanese War, 1895; returned to China, 1945; Nationalist government moved to Taiwan by Jiang Jieshi (Chang Kai-shek); government still maintains claim to legal jurisdiction over mainland China and continues to designate itself as the Republic of China; protected by US naval forces during Korean War, 1950–3; signed mutual defence pact with USA, 1954–79; end of state of civil war with People's Republic of China declared by President Lee Teng-hui, 1991; governed by a President, who appoints a premier, National Assembly and Legislative Yuan; elections held for a reformed National Assembly, 1991; Yuan voted in favour of major constitutional change, 2004. For other meanings, see Taiwan (disambiguation).

Taiwan ((zh-tspw|t=?? Taiwanese: Tâi-oân) is an island in East Asia, but the term "Taiwan" is also commonly used to collectively refer to the territories governed by the state officially known as the Republic of China (ROC), which include the island of Taiwan, Lanyu (Orchid Island) and Green Island in the Pacific off the Taiwan coast, the Pescadores in the Taiwan Strait, and Kinmen and Matsu off the southeastern coast of the People's Republic of China.

The main island of Taiwan, sometimes also referred to as Formosa (from Portuguese, meaning "beautiful"), is located at 22°57?N 120°12?E, off the coast of mainland China, south of Japan and north of the Philippines. It is bounded to the east by the Pacific Ocean, to the south by the South China Sea and the Luzon Strait, to the west by the Taiwan Strait and to the north by the East China Sea. About 4,000 years ago, ancestors of current Taiwanese aborigines settled in Taiwan. These aborigines are genetically related to Malay and Polynesians, and linguists classify their language as Austronesian. Han Chinese began settling in the Pescadores in the 1200s, but Taiwan's hostile tribes and its lack of the trade resources valued in that era rendered it unattractive to all but "occasional adventurers or fishermen engaging in barter" until the sixteenth century.. ISBN 957-638-311-0

Records from ancient China indicate that Han Chinese might have known of the existence of the main island of Taiwan since the Three Kingdoms period (third century), having assigned offshore islands in the vicinity names like Greater and Minor Liuqiu (Ryukyu in Japanese), though none of these names have been definitively matched to the main island of Taiwan. It has been claimed but not verified that the Ming Dynasty admiral Zheng He visited Taiwan between 1403 and 1424.

In 1544, a Portuguese ship sighted the main island of Taiwan and dubbed it "Ilha Formosa", which means "Beautiful Island." They were content with their trading posts in Kyushu, Japan.

Japan also sought to claim sovereignty over Taiwan (known as Takasago Koku, or "country of High Sand," a complimentary term in Japanese) since 1592, when Toyotomi Hideyoshi undertook a policy of expansion and extending Japanese influence overseas.www.gio.gov.tw/taiwan-website/5-gp/history/tw04.html Korea, to the west, was invaded, but attempts to invade Taiwan turned out to be unsuccessful due mainly to endemic & epidemic diseases which had no cure at that time such as cholera & malaria, and fierce resistance by aborigines on the island. In 1609, the Tokugawa Shogunate sent Haruno Arima on an exploratory mission of the island. In 1616, Murayama Toan led an unsuccessful invasion of the island. It was the Dutch who started importing on a large scale Chinese workers from China's Fujian province as laborers, many of whom became naturalized. The Dutch had its colonial capital at Tayoan City (present day Anping, Tainan). The Dutch military presence concentrated at a fort called Castle Zeelandia. The Dutch colonialists also used the aborigines to hunt the native Formosan Sika deer (Cervus nippon taioanus) that inhabited Taiwan, contributing to the eventual disappearance of a small subspecies in the wild. (A small population of the subspecies is being kept in captivity and currently being reintroduced into the Kenting National Park in southern Taiwan.) The pelt of the deer was shipped to Japan, from which the commodity continued its trip to Europe, the U.S., etc.

Koxinga and imperial Chinese rule

Ming naval and troop forces defeated the Dutch in 1662, subsequently expelling the Dutch government and military from the island. They were led by Lord Koxinga (Zheng Chenggong, ???), son of a Chinese pirate-merchant, and a Japanese samurai's daughter from Hirato, Kyushu. Following the fall of the Ming dynasty, Koxinga retreated to Taiwan as a self-styled Ming loyalist, and established the Kingdom of Tungning (1662?1683). Koxinga established his capital at Tainan and he and his heirs, Zheng Jing (??) who ruled from 1662-82 and his son Zheng Keshuang (???), who served less than a year, continued to launch raids on the east coast of mainland China well into the Qing dynasty in an attempt to recover the mainland. Koxinga's attempt to solicit support from the Japanese Shogun was unsuccessful.Archive of Fukuoka Prefecture, Kyushu

In 1683, the Qing dynasty defeated the Zheng holdout, and formally annexed Taiwan, placing it under the jurisdiction of Fujian province. Following the defeat of Koxinga's grandson by an armada led by Admiral Shi Lang, Zheng's followers were expatriated to the farthest reaches of the Qing Empire, leaving approximately 7,000 Han on Taiwan. The Qing government wrestled with its Taiwan policy to reduce piracy and vagrancy in the area, which led to a series of edicts to manage immigration and respect aboriginal land rights. Illegal immigrants from Fujian continued to enter Taiwan as renters of the large plots of aboriginal lands under contracts that usually involved marriage, while the border between taxpaying lands and "savage" lands migrated east, with some aborigines 'Sinicizing' while others retreated into the mountains. The move was accompanied by a modernization drive that included the building of the first railroad and the beginning of a postal service in Taiwan.

Japanese rule

In 1871, an Okinawan vessel shipwrecked on the southern tip of Taiwan and the crew of 54 were beheaded by the Paiwan aborigines. There were about 30 Paiwan casualties, and 543 Japanese ones(12 in battle and 531 by endemic diseases).

Following its defeat in the First Sino-Japanese War (1894-1895), by signing the Treaty of Shimonoseki, Qing China ceded Taiwan and the Pescadores to Japan in perpetuity, on terms dictated by the latter. Taiwan Kikou

On May 25, 1895, the Republic of Formosa was formed with a dynastic name of "Forever Qing" ("Qing" or "Ch'ing" referring to the dynastic name of China at the time: Great Qing Empire) and with capital at Tainan, to resist impending Japanese rule. Japanese forces entered the capital and quelled this resistance on October 21, 1895. Around 1935, the Japanese began an island-wide assimilation project to integrate the island into the Japanese Empire. By 1945, just before the end of World War II, desperate plans were put in place to allow entry of Taiwanese into the Japanese Diet to make Taiwan an integral part of Japan proper.fact

The signing of the Instrument of Surrender on August 15, 1945, put Taiwan under Allied occupation. On October 25, 1945, ROC troops, representing the Allied Command, accepted the formal surrender of Japanese military forces in Taihoku. However, due to the Chinese Civil War between the Kuomintang (KMT) and the Chinese Communists, the 1951 San Francisco Peace Treaty between Japan and the Allies stipulated the United States as the main occupying power of Taiwan while not naming the recipient of Taiwan's sovereignty, which Chiang Kai-Shek, President of the ROC, refused to accept. The PRC was not invited to the treaty because of the Korean War.fact

Supporters of Taiwanese independence claim that technically, documents and treaties left the legal sovereignty of Taiwan ambiguous, and the ruling KMT government of the ROC only exercised de facto control over the island. However, the validity of this stewardship is disputed by the ROC, as well as by the PRC. However, the ROC military administration on Taiwan under Chen Yi was generally unstable and corrupt; These problems, compounded with hyperinflation, unrest due to the Chinese Civil War, and distrust due to political, cultural and linguistic differences between the Taiwanese and the Mainland Chinese, quickly led to the loss of popular support for the new administration. (Subscription required) This culminated in a series of severe clashes between the ROC administration and Taiwanese, in turn leading to the bloody 228 incident and the reign of White Terror. (Subscription required) Full version at 228.lomaji.com/news/040747b.html

In 1949, upon losing the Chinese Civil War to the CPC, the KMT retreated from Mainland China and moved the ROC government to Taipei, Taiwan's largest city, while continuing to claim sovereignty over all of China and Greater Mongolia. 1: "Since the KMT ruling clique retreated to Taiwan, although its regime has continued to use the designations "Republic of China" and "government of the Republic of China," it has long since completely forfeited its right to exercise state sovereignty on behalf of China and, in reality, has always remained only a local authority in Chinese territory." Some 1.3 million refugees from Mainland China, consisting primarily of soldiers, KMT party members, and wealthy mainlanders, arrived in Taiwan around that time. From this period on, Taiwan was governed by a party-state dictatorship, with the KMT as the ruling party. However, in 1950, North Korea invaded South Korea, and in the context of the Cold War, US President Harry S. Truman intervened again and dispatched the 7th Fleet into the Taiwan Straits to "neutralize" the Straits. Page 1: "In addition 7th Fleet will take station so as to prevent invasion of Formosa and to insure that Formosa not be used as base of operations against Chinese mainland." Page 4: "Seventh Fleet is hereby assigned to operational control CINCFE for employment in following task hereby assigned CINCFE: By naval and air action prevent any attack on Formosa, or any air or sea offensive from Formosa against mainland of China." In the San Francisco Peace Treaty, which came into force on April 28, 1952, and the Treaty of Taipei, concluded hours before that date, Japan formally renounced all right, claim and title to Formosa (Taiwan) and the Pescadores (Peng-hu), and renounced all treaties signed with China before 1942. Both treaties remained silent about who would take control of the island, in part to avoid taking sides in the Chinese Civil War. Advocates of Taiwan independence have used this omission to call into question any legal claims on Taiwan, arguing that the future of Taiwan should be decided by self-determination.

During the 1960s and 1970s, Taiwan began to develop into a prosperous and dynamic economy, becoming one of the East Asian Tigers while maintaining the authoritarian, single-party government. Because of the Cold War, most Western nations and the United Nations regarded the ROC as the sole legitimate government of China until the 1970s, when most nations began switching recognition to the PRC.See UN General Assembly Resolution 2758.

Democratic transition

After Chiang Kai-shek's death in 1975, Vice President Yen Chia-kan briefly took over from 1975 to 1978 according to the Constitution, but actual power was in the hands of the Premier of the Executive Yuan, Chiang Ching-kuo, who was KMT chairman and a son of Chiang Kai-shek. After Chiang Ching-kuo died in 1988, Vice President Lee Teng-hui succeeded him as the first Taiwan-born president and chairman of the KMT. Lee became the first Taiwan president elected by popular vote in 1996, despite China's missile tests.

In 2000, Chen Shui-bian of the Democratic Progressive Party won the Presidential election, marking the first ever peaceful democratic transition of power to an opposition party in Taiwan history and a decisive end to the KMT's monopoly in administration of the central government. After surviving an assassination attempt the day before the 2004 election, Chen was re-elected to his second four-year term by thirty thousand votes. The KMT filed lawsuits to demand a recount of the votes, alleged voting fraud and staged huge rally to demand a new election.

Geography

The island of Taiwan lies some 200 kilometers off the southeastern coast of China, across the Taiwan Strait, and has an area of 35,801 square kilometers (13,823 square miles), with the East China Sea to the north, the Philippine Sea to the east, the Luzon Strait directly to the south and the South China Sea to the southwest. Taiwan's highest point is the Yu Shan at 3,997 meters, and there are five other peaks over 3,500 meters. This makes it the world's 7th highest island

The shape of the main island of Taiwan is similar to a sweet potato seen in a south-to-north direction, and therefore, Taiwanese people, especially the Min-nan division, often call themselves 'children of the Sweet Potato'. There are also other interpretations of the island shape, one of which is a whale in the ocean (the Pacific Ocean) if viewed in a west-to-east direction, which is a common orientation in ancient maps, plotted either by Western explorers or the Ching Dynasty.

Taiwan's climate is marine tropical. The Northern part of the island has a rainy season that lasts from January to late March during the southwest monsoon, and also experiences meiyu in May. The entire island succumbs to hot humid weather from June until September, while October to December are arguably the most pleasant times of year. Natural hazards such as typhoons and earthquakes are common in the region.

Taiwan is a center of bird endemism. About 98% of the population is of Han Chinese ethnicity. This group contains two subgroups: the Southern Fujianese or "Hokkien" or "Min-nan" (70% of the total population), who migrated from the coastal Southern Fujian (min-nan) region in the southeast of Mainland China; and the Hakka (15% of the total population), who originally migrated south to Guangdong, its surrounding areas and Taiwan, intermarrying extensively with Taiwanese aborigines. The remaining 12% of Han Chinese are known as Mainlanders ((zh-cpl|c=???|p=Waisheng ren|l=external-province person)) and are composed of and descend from immigrants who arrived after the Second World War. This group also includes those who fled mainland China in 1949 following the Nationalist defeat in the Chinese Civil War.

Dalu ren (???) refers to residents of mainland China. This group excludes almost all Taiwanese, including the Mainlanders, except recent immigrants from mainland China, such as those made ROC citizens through marriage. As Taiwan's birthrate is among the lowest in the world, this contingent is playing an increasingly important role in changing Taiwan's demographic makeup.

The other 2% of Taiwan's population, numbering about 440,000, are listed as the Taiwanese aborigines ((zh-cpl|c=???|p=yuánzhùmín|l=original inhabitants)), divided into 12 major groups: Ami, Atayal, Paiwan, Bunun, Puyuma, Rukai, Tsou, Saisiyat, Yami, Thao, Kavalan and Taroko.

Languages

About 80% of the people in Taiwan belong to the Holo (??) or Hoklo (??) ethnic group and speak both Mandarin and Taiwanese. The Hakka(??), about 10% of the population, have a distinct Hakka language. English is a common second language, with many large private schools such as Hess providing English instruction. A large fraction of the populace speaks Taiwanese, a variant of Min-nan, and a majority understand it. Some in the older generations only speak the Japanese they learned at school and the Taiwanese they spoke at home and are unable to communicate with many in the modern generations who only speak Mandarin.

Most aboriginal groups in Taiwan have their own languages which, unlike Taiwanese or Hakka, do not belong to the Chinese language family, but rather to the Austronesian language family. That is Zhuyin Fuhao ((zh-tpw|t=????|p=Zhùy?n Fúhào|w=Chu-yin fu-hao)), or "Symbols for Annotating Sounds", often abbreviated as Zhuyin, or known as Bopomofo (????) after the first four letters of this Chinese phonemic alphabet (bo po mo fo). Although the national government officially adopted Tongyong Pinyin in 2002, it allowed local governments to make their own choices. Taipei, Taiwan's largest city, has adopted Hanyu Pinyin, replacing earlier signage, most of which had been in a bastardized version of Wade-Giles. Kaohsiung, Taiwan's second-largest city, has adopted Tongyong. Elsewhere in Taiwan, signs tend to be in a mixture of systems, with the most common overall being MPS2, which was official before the adoption of Tongyong Pinyin.

Religion

93% of Taiwanese are adherents of a combination of Buddhism, Confucianism, and Taoism; 4.5% identify themselves as Christians, including Protestants, Catholics, Mormons, and other non-denominational Christian groups; and 2.5% are adherents of other religions, such as Islam and Judaism.

Confucianism is a philosophy that deals with secular moral ethics, and serves as the foundation of both Chinese and Taiwanese culture. The majority of Taiwanese usually combine the secular teachings of Confucianism with whatever religions they are affiliated with.

One especially important goddess for Taiwanese people is Matsu, who symbolizes the seafaring spirit of Taiwan's ancestors from Fujian and Guangdong.

Culture

Taiwan's mainstream culture is primarily derived from traditional Chinese culture, with significant influences also from Japanese and American cultures, especially in the areas of politics and architecture. The government launched a program promoting Chinese calligraphy, traditional Chinese painting, folk art, and Chinese opera.

Since the Taiwan localization movement of the 1990s, Taiwan's cultural identity has been allowed greater expression. Identity politics, along with the over 100 years of political separation from mainland China, 50 of which were under Japanese colonial rule, has led to distinct traditions in many areas, including cuisine, opera, and music.

The status of Taiwanese culture is a subject of debate. Along with the political status of Taiwan, it is disputed whether Taiwanese culture is a segment of Chinese culture (due to the Han ethnicity and a shared language and traditional customs with mainland Chinese) or a distinct culture separate from Chinese culture (due to the long period of recent political separation and the past colonization of Taiwan). Speaking Taiwanese under the localization movement has become an emblem of Taiwanese identity.

One of Taiwan's greatest attractions is the National Palace Museum, which houses more than 650,000 pieces of Chinese bronze, jade, calligraphy, painting and porcelain. The KMT moved this collection from the Forbidden City in Beijing in 1949 when it fled to Taiwan. Badminton is also common.

Karaoke, drawn from contemporary Japanese culture, is extremely popular in Taiwan, where it is known as KTV. Small soundproof rooms containing sofas and a huge TV screen can be hired out, and friends take it in turns to sing songs.

Taiwan has a high density of 24 hour convenience stores, which in addition to the usual services, provide services on behalf of financial institutions or government agencies such as collection of parking fees, utility bills, traffic violation fines, and credit card payments.

Taiwanese culture also has influenced the West: Bubble tea and milk tea are popular drinks readily available around city centers in Europe and North America. Ang Lee is the famous Taiwanese movie director of Crouching Tiger Hidden Dragon, Eat Drink Man Woman, Sense and Sensibility and Brokeback Mountain.

Notes

Chronology

Key Dates:
1987: Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) is formed as a joint venture between the Taiwan government and Philips Electronics NV.
1994: TSMC becomes a public company.
1996: TSMC and joint venture partners begin construction of a wafer fabrication plant in Camas, Washington, called WaferTech.
1999: TSMC acquires a 33 percent interest in Acer Semiconductor Manufacturing, Inc.
2000: TSMC completes acquisition of Acer, acquires Worldwide Semiconductor Manufacturing Co. for $550 million, and takes control of WaferTech.

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