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Taiwan to ease chip investment regulations in China

Posted: 19 Aug 2015 ?? ?Print Version ?Bookmark and Share

Keywords:TSMC? investment? chip manufacturer? semiconductor? UMC?

The Taiwan government is planning to ease regulations to help local chip manufacturers get a bigger slice of the semiconductor business in China. The draft regulations allow Taiwan chipmakers to have sole ownership of any new 12in fabs that they establish in China, which some Taiwan companies see as essential to protecting their proprietary technology.

The Taiwan government has restricted investments in China on concerns that the island will lose jobs and technology to its political rival. Yet Taiwan's chipmakers, which account for about a fifth of the world's production, have different concerns. They've pointed to the need to tap into China's huge chip market, which is expected to lead global growth during the rest of this decade.

Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest chip foundry, said it has urged the Taiwan government this year to amend the investment rules.

"If we really go to China, we want 100 per cent ownership," said Elizabeth Sun, TSMC's VP of corporate communications. "One hundred per cent ownership is better for a company to protect its intellectual property and trade secrets."

TSMC, which makes chips for multinational electronics companies ranging from Apple to Xilinx, said it is looking forward to new regulations from the Taiwan government. TSMC has said it is interested in having production in China in order to be closer to customers in the world's fastest growing chip market.

"We are revising the regulations and in a few days will submit a draft to the legislature for approval," according to Chu Ping, a spokesperson with Taiwan's Investment Commission under the Ministry of Economic Affairs. "The measures may be approved by the end of August at the earliest."

TSMC and Taiwan rival United Microelectronics Corp. (UMC) have 8in fabs in China making chips with process technology that lags the leading edge by several generations, as is required by Taiwan regulations.

China, which imports more than 90 per cent of the semiconductors it uses to assemble mobile devices such as Apple's iPhone, last year started offering incentives to boost the development of its domestic chip industry.

While Intel, Samsung and Qualcomm have invested in China's chip industry in recent years, Taiwan companies such as TSMC, UMC and MediaTek have been saddled by regulations they consider onerous. MediaTek's chair earlier this year said he's concerned Taiwan's regulations will marginalise the domestic chip industry.

An IC designer such as MediaTek gains the advantage of a shorter cycle time by having a fab supplier in the same location as its customers.

UMC fab

Ahead of the rule revisions, UMC is preparing to open a 300mm fab in a joint venture with the city government of Xiamen and Fujian Electronics & Information Group.

"We believe our United Semi 300mm fab being built in Xiamen provides an ideal balance between investment return and risk/cost mitigation for UMC and its JV partners," said Richard Yu, a UMC spokesman. "We look forward to pilot production in late 2016."

Relations between China and Taiwan have been contentious. China considers Taiwan a renegade province and has not ruled out the possibility that it may someday take over the island by force.

Taiwan has governed itself independently since the Chinese Nationalist Party established itself on Taiwan following the party's military overthrow in mainland China by the Chinese Communists nearly 70 years ago.

Economic ties between China and Taiwan have improved during the last eight years under the current administration of Taiwan President Ma Ying-jeou.

- Alan Patterson
??EE Times

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