Friday, April 30, 2004
Taiwan gives green signal to chip giant's investment in China
Associated Press
Taipei, April 30
Taiwan on Friday approved a plan by Taiwan Semiconductor Manufacturing Co, the world's largest producer of made-to-order chips, to move equipment to a factory the company is setting up in China.
Allowing TSMC, the flagship of Taiwan's tech industry, to invest in China has been an extremely sensitive issue because the Taiwanese have feared that the company's move might trigger a new exodus of other electronics firms to China.
TSMC became the first Taiwanese chipmaker to be allowed to invest in China after a 2002 government decision to relax restrictions on a long-standing ban. But the government has insisted on approving what kind of equipment chipmakers move to China.
On Friday, a special committee screening chipmakers' China projects approved TSMC's request to move equipment to the plant in China's business capital, Shanghai.
"The committee members unanimously agreed for TSMC to set up a plant in Shanghai," Economic Affairs Minister Lin Yi-fu said.
TSMC will be allowed to export to China its equipment for producing less-advanced silicon wafers 200 millimeters (8-inches) in diameter, Lin said.
The plant needs a total investment of $898 million (26.9 million New Taiwan dollars). But the chip giant will only be allowed to directly transmit $371 million (NT$11 million) and obtain the remaining partly through loans from foreign banks, Lin said.
A government permit for investment could be issued to TSMC in two weeks, Lin said. TSMC has said it expects the Shanghai plant to begin production before the end of this year.
Although political differences have made relations frosty since Taiwan and China split amid civil war in 1949, business ties have been expanding in the past decade.
Taiwan's chipmakers have pressured the government to lift the investment ban on them, saying they can only maintain their leading edge in the world by expanding into China to take advantage of its low wages.
The Taiwan government has said it will only allow chipmakers that have already built cutting-edge 12-inch plants in Taiwan to export to China technology for less-advanced 0.25-micron circuits for chips.
The restriction is aimed in part at making sure Taiwan won't lose its cutting-edge technology to China.
Morris Chang, chairman of TSMC, said last weekend that China, with more than 100 chipmakers and chip designing firms now, could become a world leader in chipmaking in the next 10 years.
He expected Taiwanese and Chinese chipmakers to remain competitors but also co-operate closely in manufacturing and marketing, Chang told a forum in Boao in the southern Chinese Hainan province on Sunday.
© Hindustan Times Ltd. 2004.