Fri, Mar 08, 2002 - Page 12 News List

Editorial: Don't turn Taiwan into Jurassic Park

What a shame that Guinness World Records does not have an entry for the most arcane topic on which to hold a street demonstration. Were this sad omission otherwise, then Taiwan could capture another world first tomorrow as a group of university professors and engineers take to the streets. Their grievance: that the government will allow Taiwan companies to manufacture eight-inch silicon wafers in factories in the PRC. Yes, they're mad as hell and they're not going to take it any more.

This is not to say that the eight-inch wafer issue does not pose genuine questions. But we cannot help but think that these are better dealt with in boardrooms than in the street.

The recent controversy over eight-inch wafer production in China has been notable for its sloppy logic even by Taiwan's less-then-exacting standards. For instance, we have seen Taiwan Solidarity Union (TSU) lawmaker Chen Chien-ming (陳建銘) claim that Taiwan will lose its competitive edge if its eight-inch wafer industry decamps across the Taiwan Strait.

Why this should be so is baffling. Eight-inch technology is far from being cutting edge. In fact, the major reason why companies such as UMC and TSMC want to move across the Strait is because they are upgrading rapidly to far more advanced 12-inch wafer technology. This leaves them with a lot of highly expensive, semi-obsolete equipment they can either sell for a song to the Japanese or South Koreans, who will use it to set up fabs in China, or use themselves to cash in on China's demand for lower-grade chips.

For Taiwan to retain eight-inch technology would in fact be detrimental to its industrial upgrading. And this process of upgrading has involved the repeated removal of manufacturing technology across the Strait. There was a time when Taiwan was the world's leading supplier of computer mice, dial-up modems, CD-ROM drives, 14-inch monitors -- the list is long. While these were cutting-edge items with a high markup, they were made in Taiwan. As they became commoditized and margins fell, their manufacture moved to China. What makes eight-inch wafer technology any different?

Just as specious an argument as it gets is that of the Taiwan Association of University Professors, which said earlier this week that it recognized that eight-inch wafer manufacturing would eventually move across the Strait, but that this should not happen until the changeover to 12-inch wafers was complete because it would exacerbate unemployment.

We wonder if the association could answer a few questions. For a start, we know that the electronics industry accounts for half of Taiwan's exports, but we wonder what percentage of its workforce are involved in the manufacturing of eight-inch wafers. Just what kind of rise in unemployment might we be looking at? And how many of these potentially-unemployed are Taiwanese rather than overseas-contract workers? Unless we have figures, how can we assess the real impact?

A second question: How are we to find space in the science parks, currently bursting at the seams, for the 12-inch industry without some dismantling of the eight-inch industry it is to replace. Yes, there will be some unemployment -- there usually is with structural change. But it would be utterly irresponsible to risk the long-term prospects of the chip industry just to massage current employment statistics.

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