The Ministry of Economic Affairs is set to further moderate its ban on local LCD makers’ investing in China by allowing them to buy stakes in their Chinese peers, or scrapping the restriction that their Chinese fabs must be one generation behind those of Taiwan.
“The new plans have been submitted to the Executive Yuan for approval,” Investment Commission head Fan Liang-tung (范良棟) said by telephone yesterday.
He declined to elaborate because of the sensitiveness of the issue, saying the plans have to be approved before the details could be made public.
The Chinese-language Commercial Times reported on Saturday that one of the two major bans to be lifted included allowing Taiwanese firms to hold a stake in Chinese companies.
The government only relaxed regulations on investments in China by Taiwanese LCD and chip makers in March last year on -certain conditions.
These allowed LCD makers to invest in China by setting up new fabs, but ruled out other possibilities such as purchasing a stake in Chinese firms to gain quicker access to their resources.
The ministry in December gave the green light to AU Optronics Corp’s (AUO, 友達光電) planned US$3 billion investment to form a so-called 7.5-generation (7.5G) fab in Kunshan, China, which is expected to go into mass production next year.
The ministry’s approval was so slow that AUO missed out on licenses from the Chinese government to set up advanced fabs, the paper said.
At present, the easiest option for AUO is to buy a stake in its Chinese partner Infovision Optoelectronics (Kunshan) Co (龍飛光電), whose 7.5G fab broke ground in Kunshan in 2009, the paper added.
The second major rule change from the ministry is to scrap restraints under which Taiwan’s LCD makers are not allowed to establish fabs in China that operate more advanced technologies than those in Taiwan’s, the Commercial Times said.
That means Chimei Innolux Corp (奇美電子), Taiwan’s top LCD maker, which has a 8.5G fab in Taiwan, is currently only allowed to set up fabs running 7.5G technology in China.
Chimei has said a 7.5G fab will not enhance its competitiveness in the mainland market and the government should scrap the ban.
Minister of Economic Affairs Shih Yen-shiang (施顏祥) said last month the government “has heard the voice of these makers [in wanting it to further relax the regulations].”
Taiwan has been under mounting pressure to maintain the competitiveness of its LCD industry on the global map.
A foreseeable threat is its South Korean rivals — Samsung Electronics Co and LG Display Co, which received permission from their government as early in December 2009 to set up factories in China.
Samsung’s plant will use 7.5G technology, while LG plans to build an 8G facility.
Samsung and LG, the world’s two-largest LCD makers, said on Dec. 2 that they had received approval from Beijing to build factories in Suzhou and Guangzhou, allowing them to be closer to TV and computer assemblers and enabling them to cut costs.
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