"The deal has been agreed and the total chip-making investment (by TSMC) will be no less than 10 billion dollars," the China Daily quoted Wang Wentao, the district's vice-governor, as saying.

TSMC, the first Taiwanese company to apply for wafer investment in China after authorities on the island relaxed the ban last year, will make the investment in stages, it said.

The company's plan to increase its investment in its chip plant in Shanghai's Songjiang Science and Technology Park by some 220 million dollars to 1.12 billion dollars was reported earlier this year, but has not been confirmed by authorities.

TSMC currently has a direct total investment of 898 million dollars including registered capital of 371 million dollars for its Shanghai operations.

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

Production is expected to begin in the fourth quarter of next year, with monthly production of 30,000 200-millimetre (eight inch) chips, the newspaper said.

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