Tue, Mar 12, 2002 page1

• Eight-inch fab plan gaining steam

  CROSS-STRAIT INVESTMENT Over the objection of lawmakers worried about national security, the government is pushing ahead with a plan to allow investment in eight-inch wafer fabs across the Strait

  • By Stephanie Low / STAFF REPORTER
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  Despite strong opposition from a few legislators and a group of academics, the government has reached an inter-ministerial consensus to allow chipmakers to set up eight-inch wafer fabs in China.

  When briefing lawmakers yesterday, officials from several government agencies confirmed that the government is working toward lifting the ban and a policy will be finalized by the end of the month.

  Lawmakers yesterday spoke with representatives from the Ministry of Economic Affairs, National Science Council, Mainland Affairs Council (MAC), central bank, Ministry of Finance and Ministry of Justice.

  Christine Tsung (宗才怡), minister of economic affairs, said lifting the ban is the "most urgent" matter facing the nation today, as Taiwan risks losing its competitive edge in the semiconductor industry within two years.

  Even if the ban on eight-inch wafer fabs is lifted today, Tsung said, Taiwanese firms will lag rivals such as Shanghai-based Semiconductor Manufacturing International Corp by 26 months. It takes up to 43 months to get an eight-inch fab up to full speed, Tsung said.

  Wei Che-ho (魏哲和), chairman of the National Science Council, said there are both advantages and disadvantages in allowing Taiwanese firms to set up shop across the Strait.

  Wei said the government needs to consider the market from a global perspective and Taiwan's place in the industry. If the government continues to prohibit local chipmakers from investing in China, Wei said, they may just go there anyway.

  Wei said the government should require Taiwanese investors to use old equipment and chipmaking tools in setting up fabs in China. In addition, Taiwanese firms should acquire their capital from abroad and continue to invest in 12-inch fabs in Taiwan, Wei said.

  These steps would allow Taiwan to maintain its competitiveness over China, Wei said.

  Lawmakers opposed to lifting the ban repeated fears that Taiwan's security would be threatened if eight-inch fabs are allowed to move across the Strait.

  DPP lawmaker Chen Chao-lung (陳朝龍) said China's semiconductor industry lacks tech-savvy managers. Taiwan's talent and technology will migrate to China if chipmakers are allowed to set up shop there, Chen argued.

  The lawmaker also noted that China has never renounced the use of force against Taiwan.

  Mark Chen (陳唐山), another DPP lawmaker, said lifting the ban would threaten national security and exacerbate unemployment.

  In addition, the move will lead to the hollowing out of the chip industry, the lawmaker argued, saying that when capital leaves the country it never returns.

  But business leaders have pshawed those claims, saying that much of the debate by critics outside the chip industry has been driven by ignorance and emotional arguments.

  There are 23 eight-inch wafer fabs in Taiwan -- six of which have shut down because of a worldwide industry slump and have yet to re-open.

  John Deng (鄧振中), MAC vice chairman, assured dissenting lawmakers yesterday that lifting the ban would not affect the development of Taiwan's semiconductor industry, as long as the government carefully monitors the situation.

  Deng said the government would take into account national and economic security as well as cross-strait competition when forming policy on chip investments in China.

  While Taiwanese firms would be required to leave R&D in Taiwan, they would also be limited to setting up older, eight-inch fabs that use an etching process of 0.25 microns or larger, Deng said.

  Tsung said Taiwanese firms would just move idle facilities to China and that Taiwanese firms would be allowed to set up no more than three fabs in China.
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