Sat, Jun 18, 2005 - Page 8 News List

Companies like UMC are hurting the nation

By Tony Su 蘇啟明

During an interrogation session at the Hsinchu District Prosecutors' Office on June 9 about his company's alleged investment in China, United Microelectronics Corp (UMC) chairman Robert Tsao (曹興誠) said that UMC merely shared its business and factory-building experience with He Jian Technology (Suzhou) Co. Tsao said that it only cost UMC a little to help He Jian a lot, and that's why the Chinese chipmaker is giving UMC a 15-percent stake in return. In other words, this investment is a bargain. I have some views on this.

First, regarding operational know-how: Most of the sophisticated machines used in Taiwan's wafer-foundry industry are imported, and the industry does not possess the crucial technologies. Its success lies in the past assistance of the government, which put up a great amount of capital and offered a highly preferential tax policy. Its success also lies in the nation's high-quality talent, such as engineers with master's or doctoral degrees performing tasks that are often left to regular technicians in foreign semiconductor factories. As a result, we have developed the world's most efficient business process and yield control. This is what operational know-how is.

As for various manufacturing patents, they are simply the records of achievements made as part of building new factories and upgrading to better production processes. Their actual value is not high, and they are obtained to protect a company's rights rather as a tool of competition. Taiwanese chipmakers spend a massive amount of money applying for patents, and Taiwan is already in the top five countries in terms of the number of US patents it owns. But these companies' profits from patent authorization is extremely low.

This shows that for UMC or Taiwan Semiconductor Manufacturing Co (TSMC), the world's biggest contract chipmaker, their most valuable asset is their ability to raise funds and their operational know-how. Perhaps such expertise cannot be patented, but it is much more valuable than some impractical, transitional patents.

Second, on UMC's alleged violation of the law: The Web sites of UMC (www.umc.com.tw) and He Jian (www.hjtc.com.cn) are strikingly similar. Take He Jian's most advanced 0.18-micron chips for example. About 95 percent of the company's 0.18-micron "libraries" are the same as those of UMC.

If the government fails to severely punish those who break the law, chipmakers that abide by the law and operate in Taiwan will become fools, while breaking the law becomes the best shortcut for laggards to surpass competitors.

Third, on the damage to Taiwan's semiconductor industry: When China's Semiconductor Manufacturing International Corp was established in 2000, it publicly vowed at a press conference in California to catch up to Taiwan and replace our wafer-foundry industry. Today, as a Chinese company, He Jian has also openly joined the array of companies seeking to replace or eliminate Taiwan's semiconductor industry -- with the help of UMC's most advanced manufacturing processes and even its clients. How can the government that nurtured UMC in the past and the law-abiding public possibly accept this?

What's worse, UMC has used Taiwan's resources and spent a lot of money to develop its manufacturing processes. Now, under the chairman's orders, the company has become He Jian's tool for business in China, completely disregarding the constraints of the government and its 900,000 shareholders. This method of harming Taiwan while benefiting China certainly deserves the government's and the public's harshest condemnation.

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