Chip makers PRC plans okayed

The Ministry of Economic Affairs announced yesterday that it had approved applications to invest in China from Powerchip Semiconductor Corp (力晶半導體), ProMOS Technologies Inc (茂德科技) and Advanced Semiconductor Engineering Inc (ASE, 日月光半導體).

"The approval of the investments in China will not impact on Taiwan's economy," Minister of Economic Affairs Steve Chen (陳瑞隆) said at a press conference yesterday. "Instead, local chipmakers can focus on upgrading their equipment and technology after less advanced processes are moved to China."

Powerchip and ProMOS plan to invest NT$12 billion (US$368.1 million) and US$365 million, respectively, in setting 8-inch semiconductor plants using 0.25-micro process technology in China, Chen said.

The government agreed in principle to allow local chipmakers to build a total of three 8-inch wafer plants using 0.25-micron process technology in China by the end of last year, but before yesterday only Taiwan Semiconductor Manufacturing Co (台積電) had obtained the green light.

Powerchip has two 12-inch fabs in Taiwan with a combined monthly output capacity of 85,000 wafers, while ProMOS has two 12-inch plants in Taiwan churning out 70,000 wafers per month.

ProMOS plans to open its Chinese plant in Chongqing, which is expected to start test production in early 2008, Chen said. Powerchip has not decided on the location of its plant yet.

While it was moving some operations to China, Powerchip also committed to invest NT$870 billion in Taiwan in the next five years, Chen said.

Besides the NT$450 billion investment with Japan's Elpida Memory Inc announced on Dec. 7, the company is building three 12-inch wafer plants for NT$220 billion, and plans to construct another 12-inch plant for NT$200 billion, Chen said.

The ASE's application to acquire Chinese chip testing and packaging company Global Advanced Packaging Technology Ltd (威宇科技) in Shanghai for US$60 million was also approved yesterday, allowing the company to move low-end testing and packaging operations to China.

The Chinese investment will not impact on local industry, as the Chinese unit will only generate 5 percent of ASE's total revenues after it starts mass production, Chen said.

The three companies still need to file applications and investment plans to the ministry's Investment Commission in accordance with the new China-bound investment regulations announced last Thursday.

The investments could be officially passed as easrly as next week if the three companies file their applications immediately, Chen said.