Taiwan eases curbs on its firms making semiconductors in mainland China
Competition sparks change, which previously saw Taiwan restrict manufacturing activities of its prized semiconductor sector on mainland to protect intellectual property and trade secrets
Taiwan has relaxed curbs on its companies setting up semiconductor manufacturing plants in mainland China, in a bid to enable them to better compete for mainland clients.
The island’s economics ministry said it would allow a maximum of three wholly-owned 12-inch wafer foundries to be set up on the mainland by Taiwanese companies, easing previous rules that limited such investments to mostly older technology and to joint ventures.
Amid political tensions between the neighbours, Taiwan has restricted manufacturing activities of its prized semiconductor sector in China, with an eye to protecting intellectual property and trade secrets.
However, competition from the mainland’s fast-growing, though fledgling chip industry, has put pressure on Taiwanese companies to widen their mainland footprint.
Foreign companies are also building their presence in the mainland.
While Samsung Electronics already has a huge chip plant in mainland China, Intel and Qualcomm have announced investments in China.
As a result, Taiwan Semiconductor Manufacturing and its smaller domestic rivals had urged the island nation to relax the curbs.
Beijing views self-ruled Taiwan as a renegade province and has not ruled out the use of force to bring it under its control. But relations have improved in recent years.
The relaxation was detailed in revised regulations posted on the ministry’s website that took effect on Friday. Taiwan already allows 8-inch plants, which tend to use less cutting-edge technology, to operate in mainland China as joint ventures.
Taiwan Semiconductor Manufacturing, the world’s largest contract chipmaker, has said that its mainland clients would prefer to work with the company there and that it could see itself expanding production on the mainland.
A company representative said on Tuesday the company was still evaluating the potential of setting up a new 12-inch plant on the mainland.
The new investments would come at a time Beijing is keen to attract foreign capital and foreign chip technologies into the country. They would also underscore how global tech firms are still keen to invest in China despite risks of its slowing economy and a weakening currency.
Late last year, Taiwanese authorities gave United Microelectronics, the island’s second-biggest contract chipmaker, the nod to invest US$710.64 million in a joint venture 12-inch wafer plant in Xiamen with mainland partners.
United Microelectronics has said that the Xiamen investment could reach US$1.35 billion over five years and that it would ultimately look to take full ownership of the plant.