Not long ago, Morris Chang (
On Sept. 5, however, Vice Minister of Economic Affairs Yin Chi-ming (
Yin also said that Taiwan's IC manufacturers have invested as much as NT$1.4583 trillion here, while the industry is upgrading its foundry technology to produce wafers with advanced 0.15-, or even 0.13-micron technology.In China, however, the industry is only able to produce wafers with 0.35-micron technology.
The views of both men are valid. Yin made his prediction on the basis of the fact that no Taiwanese company had built wafer plants in China over the past five years.If talented local people, capital and the leading foundry technology from the nation's semiconductor industry do not relocate en masse to China -- as traditional industry and IC suppliers did in the 1990s -- it is widely believed that China will be unable to shake Taiwan from its leading role in the semiconductor industry within five or even 10 years.
In fact, the Chinese government has tried its best to promote its IC industry since the early 1990s. Although it specified the industry as a priority in both the "8th Five-year Plan" (1990 to 1995) and the "9th Five-year Plan" (1996 to 2000), its efforts failed due to Taiwan's ban on cross-strait investments by local chipmakers.
Major chipmakers have therefore concentrated on Taiwan and striven to upgrade their technologies here. In other words, China's semiconductor industry cannot take off if Taiwanese businesspeople do not swarm across the Taiwan Strait.
The Chinese government has succeeded in attracting investments from NEC Corporation and Motorola Ltd; but US and Japan-ese companies are not as generous as Taiwanese companies and will not easily give away their technologies, capital or market.
This is not to say that China is unable to develop its economy without Taiwanese investment. But the lack of such investment will obviously slow down the speed of its development. This being the case, Yin's statement is quite right.
The situation began to change after Winston Wang (
Since Wang's Shanghai Hong Li Semiconductor Manufacturing Corp (
Meanwhile, in Taiwan, repeated calls for relaxing restrictions on chipmakers' investments in China have been heard since the Economic Development Advisory Conference demanded the "no haste, be patient" (
If local chipmakers are allowed to invest across the Strait, Beijing's favorable policies will inevitably trigger a "China fever." The world's leading IC manufacturers will also invest in China. Such developments will give Bei-jing the bargaining chips it needs to demand greater and faster technology transfers. Its goal of becoming the world center for semiconductor manufacturing would follow rapidly.If that happens, then Chang's statement would also be right.
But what about Taiwan? The nation's semiconductor industry and other high-tech industries may suffer from insufficient
capital and lack of research and development. Under pressure from China these companies may quickly disappear. Although Taiwanese chipmakers will continue their businesses in China, in the end they will be defined as "Chinese companies," leaving Taiwan's financial sector burdened by trillions of dollars in loans and debts. They will also leave many unemployed people in Taiwan for the government and society to worry about and deal with. In the long run, the nation will not prosper but perish along with its high-tech industry. Since both Chang and Yin's views are valid, which one is more likely to come true? Obviously, the answer lies in "effective management." If the government only knows about "active opening," which can easily be implemented, and solely follows market operations, Chang's prediction will come true, as China is going to become a high-tech kingdom.
Market operations are only concerned with commercial interests, but such interests do not necessarily equate to social interests. In other words, after the government has relaxed its regulations, local chipmakers will swarm to China where they can enjoy red carpet treatment and low labor costs. The end result for Taiwan, however, will be ruin.
If the government knows what the problems are, it should effectively manage Taiwanese investments in China according to the best interests of the public. If this happens, Taiwan will continue to lead in terms of its economic development in the next decade and its high-tech industry will continue to prosper.
Let's wait and see whether Taiwan will be able to maintain its prosperity or whether it will be swallowed up by China.
Huang Tien-lin is a national policy advisor to the president and a former chairman of the First Commercial Bank.
Translated by Eddy Chang
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