Ban on chip investments in China set to be eased

Minister of Economic Affairs Christine Tsung (宗才怡) said her ministry would recommend the government ease its ban on semiconductor investment in China by the end of next month.

The easing would allow companies such as Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電), the two biggest made-to-order computer chipmakers, to build plants in China and tap one of the world's biggest markets for electronics.

Tsung's remarks came after her meeting with Frank Huang (黃崇仁), chairman of Powerchip Semiconductor Corp (力晶半導體), and other industry leaders.

Her announcement confirmed reports in the local Chinese-language media that said a proposal to lift the ban would go to the Cabinet for a decision next month.

"The opening is very positive for Taiwan's semiconductor industry," Huang said following the meeting with Tsung. "The positive aspects by far outweigh the negative."

The nation's chipmakers want to enter China to keep pace with foreign rivals and tap into China's US$10 billion semiconductor market, one of the world's fastest-growing. The government has said it would ease the ban, imposed to keep China from obtaining the nation's advanced technology. Several deadlines for a final decision have come and gone.

"We needn't raise our hopes too high after the government said so many times it would relax restrictions, then didn't," said Yu Wei-kuo, who manages NT$130 million in stocks at Polaris Investment Trust Co (寶來投信). "Even if Taiwan doesn't change the regulations, companies will find other ways to invest in China."

The government, fearing an outflow of capital and industries to China, will likely lift the ban on investment in production of 8-inch silicon wafers first, Huang said.

"We will welcome the government's lifting the restriction," said Liu Chi-tung (劉啟東), director of investor relations with UMC.