SMIC founder gets legal advice

Semiconductor Manufacturing International Corp's (SMIC, 中芯國際集成電路) founder Richard Chang (張汝京), who has been fined by the government and told to stop spending money in China, said he's consulting a lawyer.

According to an e-mail seen by Bloomberg, Chang said yesterday that he "doesn't understand and regrets the move" by Taiwan and that he is a US citizen.

On Thursday, the Ministry of Economic Affairs announced that it would impose a NT$5 million (US$159,000) on Chang 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).

In a statement, the ministry also demanded that Chang withdraw his investment in SMIC within six months, or the fine will be imposed again until Chang no longer holds an interest in the company.

The ministry said Chang had a residence registered in Taiwan between 2000 and 2002, and he invested in the Shanghai-based SMIC in December 2000 without obtaining permission from the ministry.

Chang was born in Nanjing. His parents moved the family to Taiwan when he was 1.

Chang said yesterday that he moved to China in February 2000 after studying and working in the US for years.

``It will be tough to enforce the penalty given that Chang holds US citizenship,'' said Chan Kum Kong, head of research at Nomura Securities based in Shanghai.

``They are using Chang as an example to send out a message to warn other Taiwanese companies not to make investments in China without getting approval.''

The government restricts investments in China by the nation's chipmakers on concern China would take jobs and possibly steal advanced technology.

Taiwan Semiconductor Manuf-acturing Co (TSMC, 台積電), the world's largest supplier of made-to-order chips, is the only Taiwan-ese company with approval from the government to produce chips in China. TSMC started production of 8-inch wafers in Shanghai last October.

The government is also investigating relations between United Microelectronics Corp (UMC, 聯電), the world's second-largest supplier of made-to-order semiconductors, and China-based He Jian Technology (Suzhou) Co (和艦科技) for possible violations on chip investments.

Last September SIMC became the first Chinese company to produce 12-inch wafers, which help cut production costs by more than doubling the number of chips that can be made compared with standard 8-inch wafers.