No cost benefit in China wafer fab, says TSMC's Chang

"The reason we are going to China is not because of lower cost," he said. "The reason we are going is because not all Chinese business can be served from outside China."

TSMC started building an 8-inch wafer fab in Shanghai last year. The facility is slowly ramping up and should put out about 1,000 wafers this quarter.

By way of comparison, TSMC's Chinese rival, Semiconductor Manufacturing International Corp. (SMIC), plans on cranking out about 125,000 wafers per month by the end of this year. United Microelectronics Corp. also has a strong China presence, through its affiliate, Suzhou-based Hejian Technologies.

Chang played down questions about whether TSMC would lose customers to SMIC or other Chinese foundries because of its small presence in China, which is one of the fastest growing semiconductor markets. Demand is expected to hit $35 billion this year, while domestic supply will only manage about $5.5 billion, according to government estimates.