The Investment Commission of Taiwan's Ministry of Economic Affairs (MOEA) has confirmed it has received an application submitted by TSMC for establishing a 12-inch wafer manufacturing facility and a design service center in Nanjing, China.

A decision to approve or refuse the application will be made within two months, said officials from the Investment Commission. TSMC plans to invest a total of US$3 billion in the project.

TSMC's overall capex for 2015 is estimated at US$8 billion, and the planned investment in its 12-inch facility in China is more than one-third of the 2015 capex indicating the importance of the China market for the foundry.

TSMC has unveiled plans to build a 12-inch wafer fab capable of producing 20,000 wafers monthly in Nanjing. The facility is scheduled to begin volume production of 16nm process technology in the second half of 2018. TSMC will also set up a design center in Nanjing for establishing the company's design ecosystem locally, the company said.

TSMC expects to commence the plans upon receiving the approval from the Investment Commission, the company added.

A TSMC executive stationed in China was quoted in previous reports as saying that the foundry has robust demand for 16nm chips from China's IC design sector, with almost 10 customers already engaged in the design-in process.

Fellow foundry companies United Microelectronics (UMC) and Powerchip Technology are already moving forward with plans announced previously to cooperate with China's local governments and businesses to build 12-inch wafer fabs in the region.

UMC has disclosed the Xiamen fab, a 3-way joint venture between UMC, Xiamen Municipal Government and Fujian Electronics and Information Group, will be ready to go online by the end of 2016, while Powerchip in cooperation with the Hefei city government of China's Anhui province expects volume production at the JV fab in Hefei to begin by October 2017.

However, UMC and Powerchip are not allowed to invest in their most-advanced process technologies at their 12-inch JV fabs in China according to Taiwan's laws and regulations.