Tue, Nov 14, 2006 - Page 12 News List

MAC may ease restrictions on fab investment

HOPEFUL An economics official's statement that the cross-strait affairs agency was willing to discuss the issue sent semiconductor stocks climbing on the TSE


Shares of the nation's major computer memory chipmakers rallied yesterday, boosted by reports that the government plans to ease regulations on local semiconductor companies' investment in China before the end of the year.

The stock prices of leading domestic computer memory chipmakers Powerchip Semiconductor Corp (力晶半導體) and ProMOS Technologies Inc (茂德科技) rose 0.49 percent and 1.89 percent to NT$20.4 (US$0.62) and NT$13.45, respectively, on the over-the-counter GRETAI Securities Market. Both stocks outperformed the benchmark TAIEX, which fell 0.53 percent.


To tap into China's burgeoning chip industry, local semiconductor companies have been waiting for the government to soften its stance by easing the restrictions on Taiwanese semiconductor companies setting up factories in China.

Powerchip and ProMOS filed applications with the government to invest in China two years ago, hoping to follow the path of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which has a plant to supply chips to customers that have expanded to China.

No significant progress has been made since then.

Hope was rekindled, however, as Vice Minister of Economic Affairs Shih Yen-hsiang (施顏祥) told legislators yesterday that "the government agencies, including the Mainland Affairs Council, are discussing further easing restrictions on Chinese investment."

The relaxations might include allowing Taiwanese companies to make chips on 0.18-micron process technology, Shih said.

The relaxation would allow local semiconductor companies to make chips using technologies parallel to their rivals in China.

The council's agreement to discuss the issue could signal real progress, as the cross-strait policy maker is regarded as the last obstacle toward further liberalization.

No timetable

Shih's comments came after a news agency reported that the government planned to give the green light to Powerchip and ProMOS to build factories in China by the end of this quarter, citing Investment Commission Executive Secretary Huang Chin-tan (黃慶堂).

Shih declined to give a timetable for opening, however.

The government has said that the restrictions aim to prevent local companies from losing market share to their Chinese rivals as well as to safeguard national security.

In April, the government agreed to allow local chip testing and packaging service providers to build less-advanced plants in China, but has not approved any proposals to date.

Siliconware Precision Industries Co (矽品), the nation's second-largest chip packager, submitted its proposal to build a Chinese factory soon after the new rules took effect.

Currently, TSMC is the only local chipmaker that has a manufacturing plant in China after the Taiwanese government agreed in 2002 to allow three local chipmakers to build fabrication plants using less advanced 0.25-micron process technology. It has yet to decide on the two other firms.

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