Can anything prevent China becoming a major player in the global semiconductor industry? The announcements by several Taiwanese semiconductor firms that they are selling non-controlling stakes to China’s Tsinghua Unigroup are an indicatation that Beijing is stepping up efforts to build its own semiconductor industry and reduce its reliance on foreign suppliers.
Those deals follow a trend of consolidation within the global semiconductor industry this year, as companies seek to counter slowing growth and rising costs. However, one implication of this tendency is that the industry might see disruption caused by the entrance of Chinese firms, as evidenced by the negative impacts of Chinese players on the solar power, LED backlight and LCD industries in recent years.
On Friday last week, Siliconware Precision Industries, the world’s third-largest chip tester and packager, made public its intention to sell a 24.9 percent stake to Tsinghua Unigroup for NT$56.8 billion (US$1.72 billion). Hours later, Siliconware’s subsidiary ChipMOS Technologies also announced that it is to sell a 25 percent stake to Tsinghua Unigroup for NT$11.9 billion. These announcements came on the heels of Taiwanese memorychip packager Powertech Technology’s decision in October to sell a 25 percent stake to Tsinghua Unigroup for NT$19.4 billion. Also last week, Taiwanese audio electronics maker Merry Electronics announced it would sell a 25.4 percent stake to Chinese connector supplier Luxshare Precision Industry for NT$3.78 billion.
Although these deals still need shareholder approval and a regulatory green light, they come at a time when growing competition and a challenging global outlook have prompted some companies in Hsinchu Science Park — Taiwan’s high-tech cradle and home to the nation’s prized semiconductor companies — to look for potential foreign buyers (including Chinese), according to a report published in the Chinese-language Business Weekly last week.
Taiwanese companies selling shares to Chinese investors does not signal the arrival of the apocalypse, as long as firms can protect their know-how while using new funds to improve operating efficiency. However, a slew of companies selling stock to overseas businesses does imply that local equities look relatively attractive to overseas investors, making them enticing takeover targets. According to Financial Supervisory Commission data, Taiwan’s listed companies are currently priced at a median of 13 times their earnings, cheaper than their peers’ price-to-earnings ratio of 16 times in Japan and nearly 15 times in South Korea. It is no surprise that wealthy Chinese investors, who have been on a global shopping spree over the past few years, are now fixing their sights on Taiwanese companies.
Even so, the government must seriously consider whether Tsinghua Unigroup’s investments would have a negative impact on Taiwan’s semiconductor sector, because the combined global market shares of Siliconware, ChipMOS and Powertech are significant and the semiconductor industry is an important aspect of the nation’s economy. In addition, in view of the aggressive acquisitions of Chinese firms in the semiconductor business the government has to consider whether the removal of a ban on Chinese investment in Taiwan’s IC design sector would be appropriate, with Tsinghua Unigroup repeatedly expressing an interest in acquiring Taiwan’s leading chip designer MediaTek and chip module maker Phison Electronics.
Several factors are driving China’s push into the global semiconductor business, including government support, access to capital and reasonable prices. How well Taiwan’s technology industry weathers the challenges facing it will provide insight into whether local firms have visionary plans for long-term development and can leverage their Chinese counterparts’ strengths.
It will also reveal whether policymakers are taking the threat of Beijing’s “Made-in-China 2025” policy seriously enough.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
In an article published on this page on Tuesday, Kaohsiung-based journalist Julien Oeuillet wrote that “legions of people worldwide would care if a disaster occurred in South Korea or Japan, but the same people would not bat an eyelid if Taiwan disappeared.” That is quite a statement. We are constantly reading about the importance of Taiwan Semiconductor Manufacturing Co (TSMC), hailed in Taiwan as the nation’s “silicon shield” protecting it from hostile foreign forces such as the Chinese Communist Party (CCP), and so crucial to the global supply chain for semiconductors that its loss would cost the global economy US$1
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
Sasha B. Chhabra’s column (“Michelle Yeoh should no longer be welcome,” March 26, page 8) lamented an Instagram post by renowned actress Michelle Yeoh (楊紫瓊) about her recent visit to “Taipei, China.” It is Chhabra’s opinion that, in response to parroting Beijing’s propaganda about the status of Taiwan, Yeoh should be banned from entering this nation and her films cut off from funding by government-backed agencies, as well as disqualified from competing in the Golden Horse Awards. She and other celebrities, he wrote, must be made to understand “that there are consequences for their actions if they become political pawns of
RSS