DPP open to chip work across Strait

The government may allow advanced semiconductor package-and-testing companies to invest in China as part of a deal to let Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) start operations in the country, a Democratic Pro-gressive Party (DPP) lawmaker said yesterday.

Chiu Chuang-chin (邱創進), a convener of the DPP's technology policy division at the Legislative Yuan, told reporters that the Industrial Development Bureau has in principle agreed to let chip package-and-testing companies invest in China.

Chiu said the Cabinet may give a green light to the plan in one month.

Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) gained 4.1 percent yesterday on news that the company may soon gain government approval to operate its first plant across the Strait, in Shanghai.

TSMC rose NT$2.5 to close at NT$63 on the TAIEX, outperforming the benchmark index's 1.26-percent gain.

The DPP lawmaker and his colleagues yesterday were briefed on the plan by Vice Minister of Economic Affairs Shih Yen-hsiang (施顏祥), Chen Chao-yi (陳昭義), director of the Industrial Development Bureau, and Fu Don-cheng (傅棟成), director of the Mainland Affairs Council's economic affairs department.

"The likelihood of starting production in China is one of the major reasons for the rise in TSMC shares," said Roger Lin (林俊毅), an analyst at Pacific Securities Co (太平洋證券).

The ministry denied it planned to hold a meeting of government and industry experts by May 20 to screen the second-stage application by TSMC to relocate an idle 8-inch plant to China.

"We're not sure when the panel members will meet," said Kuo Jin-der (郭俊德), secretary-general of the Industrial Development Bureau under the Ministry of Economic Affairs.

The ministry is closely monitoring exports of core technologies from the nation's high-tech firms to China.

TSMC received initial approval from the government in January last year for the US$898-million plan to move depreciated production facilities from Taiwan to Shanghai, in an attempt to get closer to potential customers in the world's fastest-growing market.

Despite the uncertain timetable, industry watchers do not expect any serious postponement to hurt TSMC's ability to compete with Chinese semiconductor start-ups such as Semiconductor Manufacturing International Co (中芯國際集成電路).

"I don't see any production delays as some people feared," said Chris Hsieh (謝偉民), a senior technology analyst with ING Securities Ltd in Taipei, adding that TSMC has already constructed key parts of its facility in Shanghai.

TSMC should be largely on schedule by moving in the equipment in the current quarter as planned, Hsieh said. The machinery relocation will only interrupt the foundry two weeks or so, he added.

Hsieh said the relocation will disrupt some wafer shipments as TSMC's capacity utilization is full, but the foundry should be able to keep its forecast of a 15-percent rise in wafer shipments for this year.

Patrick Wang (王文宏), a semiconductor analyst at Yuanta Core Pacific Capital Management (元大京華投顧), was not concerned about delays in wafer production and was optimistic about a nod from Chen Shui-bian's (陳水扁) administration for TSMC's factory in China.

"The whole process will go smoothly only if the government gives the green light," Wang said.

TSMC spokesman Tzeng Jinnhaw (曾晉皓) said the company has already submitted an application to the government.