Taiwan’s technology companies yesterday urged the government to take heed of Broadcom Ltd’s bid to acquire Qualcomm Inc, as the deal could have a significant affect on the sector.
Broadcom in November last year made an unsolicited US$105 billion offer to acquire Qualcomm, launching what would be the largest-ever technology takeover battle.
The deal could affect Taiwan’s semiconductor industry, including chip manufacturing, integrated circuit packaging, as well as information and communications technologies industries, the Allied Association for Science Park Industries said in a statement yesterday.
If combined, the two US companies could control half of the global market share for chips used in consumer electronics, granting them undue influence and bargaining power against suppliers, the association said, adding that this dominance would further pressure the profitability of local technology companies and affect the nation’s growth prospects.
LEVERAGE
The association said that as the deal requires government approval, it should leverage its position to stipulate added conditions to ensure the long-term prospects of local technology companies.
The association also urged the government to help local technology companies tap into opportunities from emerging fields, such as artificial intelligence (AI), the association said.
While Taiwan is well-positioned to supply vital hardware and components, such as flash memory to process data for AI applications, local companies require leadership from the government due to their smaller scale.
The government should take the lead in establishing a platform that would promote vertical collaboration across the supply chain, the association said.
Emerging fields such as AI, 5G networks and automotive electronics require immense investment, so industries must improve collaboration under the government’s guidance and assistance, it said.
ABOLISH LIMITS
The association advised the government to increase wages and research funding for university professors and researchers to cultivate and retain talent.
Association members support the Ministry of Science and Technology’s plans to abolish limits on wages for research assistants and for researchers to be paid up to NT$300,000, it said.
Businesses also need incentives to retain talent, such as improved tax rules on profit-sharing arrangements and dividend income, lest their best staff be poached by Chinese rivals, the association said.
However, Deputy Minister of Science and Technology Hsu Yu-chin (許有進) said that as the two chipmakers are not Taiwanese companies, the government can express its opinion, but has no authority to stop the acquisition.
The government is monitoring the deal and would continue to help in elevating the capabilities of local technology companies to preserve their bargaining power with buyers, Hsu said.
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