Chipmakers soon to enjoy less strict investment rules

The government is planning to allow Taiwanese semiconductor companies to manufacture chips using relatively advanced technologies in their Chinese plants, accelerating the momentum following a series of recent relaxing measures, an official said yesterday.

This represents a positive response on the part of the government to local chipmakers' persistent urging that it allow them to manufacture chips using 0.18-micron processing technology in China to meet customer demand.

"It won't be long before the new measures come into effect," Vice Economic Affairs Minister Shih Yen-hsiang (施顏祥) said yesterday.

The ministry's proposal to scrap the ban was in the final stages, said Huang Chin-tan (黃慶堂), head of the Investment Commission, the government's China-bound investment watchdog. He added that Economic Minister Steve Chen (陳瑞隆) had recently told lawmakers that the government would make a decision before the year ended.

Companies like Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), would be among the first to benefit from the relaxation of investment restrictions as they would face less onerous review process than they did in the past.

TSMC, the world's largest chipmaker on a contract basis, filed an application for making chips using 0.18-miron processing technology at its Shanghai factory about a year ago, company spokesman Tzeng Jinnhaw (曾晉皓) said.

"We submitted the application to cope with market demand there," Tzeng said, without giving further details.

Memory chipmakers Powerchip Semiconductor Corp (力晶半導體) and ProMOS Technologies Inc (茂德科技) on Wednesday gained government approval to transfer old equipment to China and make chips using the less advanced 0.25-miron processing technology there.

TSMC is at present the only Taiwanese chipmaker to be making chips in China and supplying the Chinese market, which has surpassed Japan as the world's second-largest market for semiconductors.

TSMC said that its Shanghai factory produces 30,000 wafers a month.

The ministry, however, does not plan to raise the China-bound investment ceiling on Taiwanese companies, which is capped at 40 percent of a company's net worth.

Separately, Chen said the ministry was exploring proper approaches by which to regulate the acquisition of private equity fund groups and the buyout of local firms amid growing interests by overseas investors.

Late last month, a consortium led by the US-based Carlyle Group made a US$5.46 billion buyout bid for the nation's biggest chip packager, Advanced Semiconductor Engineering Inc (日月光半導體).

"We are concerned that acquisitions by private equity fund groups could have an adverse impact on the nation's industrial development," Chen said, adding that the government would nonetheless respect free market mechanisms.