Mon, Mar 11, 2002 - Page 17 News List

Nomura's Koo enters chip debate

SEMICONDUCTORS An economist from the research institute said that industries cultivated by the government should stay in Taiwan because the tax-payers helped foot the bill

By Stanley Chou  /  STAFF REPORTER , WITH BLOOMBERG

A top economist at Japan's Nomura Research Institute joined the heated debate on eight-inch wafers, suggesting that the fabs remain in Taiwan.

"Taiwan should avoid the vicious cycle that once an industry matures it moves to China," local media reported Richard Koo (辜朝明), chief economist at the Nomura Research Institute, as saying.

Koo made the comments during a Saturday meeting with Lin Hsin-yi (林信義), vice premier and chairman of the Council for Economic Planning and Development.

Some fear that moving chip factories to China would accelerate capital flight across the Taiwan Strait and further weaken the domestic economy.

Nevertheless, leading executives in the US$20 billion chip industry are clamoring to make the jump to China, fearing that if they fail to move soon they will become less competitive.

The government said it will announce rules to ease the ban by the end of this month.

But Koo said Taiwan should be cautious. "The government should be aware of the fact that continuing to develop new industries or new technologies is not going to solve all of our problems," he said.

Declining imports shows that the shift of business to China is hurting the economy, Koo said.

"There are two reasons that the demand for imports is decreasing. One is that the financial situation worsened, causing industries to suspend new investments. The other reason is that industries are moving their production lines to China, which in turn decreases local demand for production facilities," he said.

"Taiwan should continue its efforts to develop new technology. But once the technology is developed and the industry starts to make money, it should not instantly move to China. It's not fair to taxpayers," Koo said.

"Since most of these technologies are the product of joint efforts between the business sector, the government and academics, the taxpayers should have a say with regard to manufacturing being moved to China," he said.

Meanwhile, the head of the Taipei Computer Association said that moving across the Strait is a matter of survival.

"If the government does not allow the semiconductor industry to move to China, it would pose a threat to the future of local semiconductor companies. If Taiwan's eight-inch wafer fabs can move to China, the local sector will quickly build 12-inch wafer fabs. Some 8,000 new job opportunities would be created," said Frank Huang (黃崇仁), chairman of Taipei Computer Association and Powerchip Semiconductor Corp (力晶半導體).

The statement was presented in a proposal to President Chen Shui-bian (陳水扁) and to other leaders of major political parties on Saturday. Huang said that such a move would provide more benefits than shortcomings.

The Cabinet last week announced plans to allow the transfer of idle plants on the condition that companies investing in China also invest in 12-inch wafer manufacturing here.

The dinner-plate size wafers will help cut production costs by up to a third.

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