The government is relaxing long-term restrictions on Taiwanese companies’ China-bound investments, especially in the flat-panel and chipmaking sectors, a government official said yesterday.
The measure aims to help local manufacturers, primarily technology firms, catch up with competitors in expanding their presence in China, one of the world’s fastest-growing electronics markets.
“The world has changed drastically since we first allowed [Chinese investment for chipmakers] three years ago ... To cope with the changes, we cannot stick to existing [rules],” Minister of Economic Affairs Shih Yen-shiang (施顏祥) told a media briefing yesterday.
Taiwanese liquid-crystal-display (LCD) panel makers, including AU Optronics Corp (友達光電), will now be allowed to build advanced production lines in China to produce TV panels.
But there are limitations. Companies intending to build advanced 7.5-generation factories in China will have to operate at least a more advanced 8.5-generation plant in Taiwan, and will have to come up with new investment at home, the ministry said.
The government will only permit Taiwanese panel makers to build three advanced factories in China, the ministry said.
The latest move matches Seoul’s recent lifting of a ban on flat-panel investment in China.
The South Korean government has approved proposals by Samsung Electronics Co and LG Display Co to build TV panel factories in China by forming joint ventures with Chinese local governments. Samsung and LG Display plan to build a 7.5G plant and a 8.5G plant in China.
“We will accelerate the pace of [capacity] expansion in China,” AU Optronics spokesperson Yawen Hsiao (蕭雅雯) said. “It is reasonable to consider building a 7.5G plant in China as our Chinese customers need big TV panels.”
The ministry is also loosening restrictions on contract chipmakers’ investing in China.
Taiwanese contract chipmakers will now be allowed to own shares in Chinese chipmakers after being given permission to build less advanced 8-inch factories in China in 2006.
This will help Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) obtain an 8 percent stake in China’s biggest chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯國際), along with US$200 million in damages to settle intellectual property cases with TSMC.
United Microelectronics Corp (UMC, 聯電), the nation’s second-biggest contract chipmaker, will be able to solve the long-term problem of accepting a 15 percent share of He Jian Technology (Suzhou) Co (和艦) given by the chipmaker for helping it establish the firm.
UMC’s board gave the go-ahead to a proposal to buy another 85 percent of the Chinese chipmaker for US$285 million to fully own He Jian last April.
Taiwanese contract chipmakers would have to make sure they keep their technological lead by two technological nodes, the ministry said.
Local companies are expected to submit applications for Chinese investments by the end of this month, the ministry said.
“We have sent the proposal to the government and we are waiting for approval,” said a UMC official, who declined to be named.
The ministry yesterday also lifted restrictions on local chip testers and packagers. They can now provide services for customers using advanced technologies in China. The companies would have to file applications for new investment on new equipment totaling more than US$50 million.
The ministry also eased restrictions in other sectors including investing in China’s real estate, telecoms and securities markets.
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