Wed, Mar 16, 2005 - Page 10 News List

Chip testers worried by China limits

INVESTMENTChip testers and packagers hope the government will not delay easing limits on investment in China after the passage of the 'anti-secession' law


Taiwanese chip testers and packagers are banking on the government's removal of a ban on semiconductor investment in China to safeguard their competitiveness, companies officials said yesterday.

The remarks came in response to the government's deepening caution over loosening limits on local chipmakers' cross-strait trade after the passage of Beijing's "anti-secession" law on Monday.

"We hope the government will relax the ban on building plants in China [as business is growing in light of] rising chip output from chipmakers in China, including He Jian Technology (Suzhou) Co (和艦)," said an official with a major local semiconductor player, who requested anonymity.

As international semiconductor companies such as Amkor Technology Inc already established operations in China a few years ago, Taiwan's persistent ban will make it increasingly difficult for local companies to vie for a foothold in the world's fastest-growing semiconductor market, she said

Shares of Taiwan's two biggest suppliers of chip testers and packagers, Advanced Semiconductor Engineering Inc (日月光) and Siliconware Precision Industries Co (矽品), slid 3.97 percent and 3.43 percent, respectively, on the Taiwan Stock Exchange yesterday.

Industry watchers had expected the ban to be lifted by the year's end, amid improving cross-strait relations after successful charter flights over the Lunar New Year, following a two-year review.

"But, the passage of the law has adversely impacted cross-strait relations ? We're more cautious in pushing for further trade or cultural exchanges across the Strait," Cabinet spokesman Cho Jung-tai (卓榮泰) said yesterday.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is currently the only local chipmaker allowed to produce chips in China.

Cho said the government would put a hold on any cross-strait trade policies, awaiting Beijing's reaction to a march to protest the anti-secession law that is scheduled for March 26 in Taiwan.

"At this juncture, the government needs to react toughly to Beijing's move. There's still a chance for an opening [of regulations]," said George Wu (吳裕良), a portfolio manager overseeing the equivalent of US$31 million for Invesco Taiwan Ltd (景順投信) in Taipei. "Besides, business there is still in the start-up stage."

Instead, Wu was more worried about the postponement in allowing Taiwan's chipmakers such as TSMC to produce chips using the relatively advanced 0.18 process technology in China.

Demand for chips made using 0.18 process technology is pretty strong in China, Wu said, adding it accounts for the biggest portion of business at Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路), TSMC's biggest rival in China.

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