Semiconductor firms need to develop brands

China levies a 17-percent value-added tax on imported semiconductors, whereas locally produced ones pay only 6 percent, Hsieh said.

Last year, the government lifted its decades-old ban on investments by Taiwanese companies in the Chinese semiconductor industry, but it has yet to fully approve any such investments. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has received "preliminary approval" to build an 8-inch wafer fab in Shanghai, but has not yet been permitted by the Taiwan government to transfer funds to China for the project. A government committee is expected to review the plan tomorrow.