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Businessman to be fined NT$5m

The Ministry of Economic Affairs yesterday decided to punish a Taiwanese businessman for his illegal investment in China's largest supplier of made-to-order chips.

In a statement released yesterday, the ministry announced that it will impose a fine of NT$5 million on Richard Chang (張汝京), a former Taiwanese citizen and now the founder and chief executive officer of Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路) in Shanghai.

The ministry's Investment Committee last year warned Chang that he may face jail and fines for violating restrictions on chip-making investments in China, in accordance with the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area (兩岸人民關係條例).

SMIC, whose customers include South Korea's Samsung Electronics Co and Infineon Technologies AG of Germany, is competing with its Taiwanese rivals, such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (UMC, 聯電) in the contract chipmaking business.

The ministry also demanded Chang withdraw his investment in SMIC within six months, or the fine will be imposed again until Chang's interest is removed from the company, the statement said.

Chang argued that he is a citizen of the US, but the ministry said that Chang had a residence registered in Taiwan between 2000 and 2002, and he invested in SMIC in December 2000 without obtaining permission from the ministry, the statement said.

The government began lifting restrictions on Taiwanese investment in Chinese chip plants earlier last year, enabling TSMC to open a wafer factory in Shanghai later last year.

According to an initial public offering document SMIC presented to Hong Kong stock authorities in February last year, Chang and 14 other people owned half the company, while Hong Kong-listed Shanghai Industrial Holdings Ltd held 12 percent of the company and Motorola Inc held 11.4 percent. Other shareholders are Beijing Beida Jade Bird Software System Co, which owns 6.8 percent, and a global fund, which owns 7.4 percent.
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