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Taiwan fabs appeal for softer policy on China investment

Posted: 31 Oct 2007 ?? ?Print Version ?Bookmark and Share

Keywords:Taiwan foundry? China investment restriction? chip production?

Taiwan's top two foundries have appealed to the government to loosen restrictions on chip investments in China, according to a report from the Associated Press.

Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) warned that the country could lose their competitive edge due to the ban on building production lines on the mainland.

The appeals of the foundries followed a district court ruling last week clearing UMC's former chairman of breaking a Taiwan law by illegally setting up a chip company in China.

Taiwan guards the export of chipmaking technology for fear of losing its lead in the global semiconductor industry and only allows chipmakers to invest in 0.18mm chip production in China.

Morris Chang, TSMC chairman, warned that Taiwan could lose its leading edge in chip production, saying the foundry's less advanced Chinese manufacturing lines have failed to keep up with client demands.

Meanwhile, Jackson Hu, UMC chairman, urged the government to relax the restrictions, noting Intel Corp. is set to upgrade its Chinese chip facilities to 90nm and 65nm productions. Hu added that authorities should allow UMC to own a minority stake in China-based HeJian Technology Co., after the court found its executives not guilty of breaching shareholders' trust in providing technology, financial assistance and transferring chip orders to HeJian.

Several Taiwan firms have tried to avoid the government's investment restrictions by seeking public listings in Hong Kong or setting up subsidiaries in third countries. The UMC ruling may put pressure on Taiwan leaders to go towards a more liberal policy. Premier Chang Chung-hsiung, however, disclosed that authorities will wait for a higher court's final verdict before making any possible policy changes.

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