SAN JOSE, Calif. — Silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has moved to expand its fab capacity in China.

As reported, TSMC signed a contract with Atmel Corp. Under the terms, TSMC purchased Atmel's 8-inch wafer fabrication equipment from its fab in North Tyneside, United Kingdom. The deal totalled $82 million.

''This transaction is part of our eight-inch wafer strategy, and part of the wafer fabrication equipment may be transferred to TSMC (Shanghai), our fully owned subsidiary in mainland China, for capacity expansion next year,'' said C.C. Wei, senior vice president of operations at TSMC.

TSMC owns and operates an 8-inch fab in Shanghai, which is based on 0.25-micron technology. The company has been scrambling to expand its 8-inch capacity, which is seeing renewed demand in the marketplace.