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Chipmakers call for less gov't restrictions

Posted: 20 Jul 2015 ?? ?Print Version ?Bookmark and Share

Keywords:M&A? chipmaker? merger? semiconductor?

The current trend of mergers and acquisitions happening globally is starting to trouble chipmakers in Taiwan, who think that they might be left behind in an industry that is quickly consolidating.

The recently announced M&A plans of Intel and Altera, NXP and Freescale, as well as Tsinghua Unigroup and Micron are signs that big players are aiming for sustainability as the chip industry enters maturity, according to chip executives in Taiwan, who are calling on their government to ease local restrictions governing investment in China.

"Intel, NXP and Qualcomm have more advanced technology than (companies in) Taiwan," MediaTek Chairman M.K. Tsai said on the sidelines of a shareholder meeting on June 12. "They are continuing to invest in China. If Taiwan companies are restricted... they'll be marginalised."

MediaTek is the world's third-largest chip designer.

The Taiwanese government restricts investments by domestic chipmakers in China on concerns that it will lose jobs and technology to its political rival. Taiwan has governed itself independently since the Chinese Nationalist Party established itself on Taiwan following the party's defeat in mainland China by the Chinese Communists nearly 70 years ago. China considers Taiwan a renegade province. The Taiwan government's efforts to protect its domestic industry may be self-defeating, according to some.

"Taiwan's regulations haven't made Taiwan more secure, but they have made local companies less competitive," said Matt Cleary, a semiconductor analyst who has worked for investment banks in Taipei. The government's attempt to control chip technology and investment has failed to stop recruitment of Taiwanese semiconductor engineers by Chinese rivals for better compensation, he added.

To be sure, the Taiwan government has given the green light to the world's biggest foundriesTaiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC)to open fabs in China on the condition that the plants use process technology that lags the state of the art by about two generations. Nearly a decade ago, UMC ran afoul of Taiwan regulators following allegations of illegal ties to Chinese foundry He Jian.

More recently, UMC has proceeded with a planned joint venture in the southeast Chinese city of Xiamen.

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