Here it comes again — a Chinese investment that poses a potential threat to Taiwan’s long-term interests. No, this is not about the planned buyout of Next Media Group’s Taiwanese businesses that has prompted concerns over how China may use the deal to influence Taiwan in the future. However, as with the Next Media deal, LED chip supplier Formosa Epitaxy’s (ForEpi) plan to ally with China’s Sanan Optoelectronics warrants the same concerns over the Taiwanese industry’s development.
Last week, ForEpi announced plans to sell up to 120 million new shares to Sanan, giving the Chinese company a 19.9 percent stake in the firm and making it its largest institutional shareholder, ahead of Japan’s Mitsui & Co, which holds 15 percent.
The NT$2.35 billion (US$80.8 million) deal, pending approval from both the company’s shareholders and from regulators, marks the first Chinese investment since late March, when Taiwan launched its third round of market liberalization with China, affecting 161 types of industries. Chinese investors are still banned from having managerial control, or becoming major shareholders in several key sectors such as the LED, flat panel, semiconductor and solar battery industries.
If approved by the Ministry of Economic Affairs’ Investment Commission, the deal will also become the largest single Chinese investment in Taiwan since it relaxed rules on Chinese investment in 2009.
The deal has surprised many in the LED industry and caused mixed reactions inside and outside of the sector, as Sanan is a major rival of Taiwanese LED chipmakers such as ForEpi and Epistar Corp.
The capital injection would help ForEpi strengthen its finances and expand the scale of its business. Moreover, the strategic partnership would provide it with greater access to China’s LED market. Advocates of this first cross-strait cooperation in the LED industry also expect the deal to help ease the cutthroat competition among LED makers, under which Chinese companies have cut prices in recent years because of over-investment and a production glut. These advocates hope that more collaboration will come in future.
The downside of such collaboration is the possibility of technology leaks that could hinder Taiwanese firms’ growth. While ForEpi has vowed to protect its patent portfolio and retain managerial rights, concern over Sanan gaining the upper hand in new technological innovation will remain, given Chinese firms’ notorious record in this area.
It is not yet known how Mitsui, which became a strategic partner of ForEpi early last year, and Toyoda Gosei Co, which inked a cross-license agreement with the firm last month, will respond to the tie-up. However, the possibility of technology leaks may have touched a raw nerve. For instance, a dispute over the next-generation indium gallium zinc oxide panel technology is said to be a key factor holding up financing and partnership negotiations between Taiwan’s Hon Hai Precision Industry Co and Japan’s Sharp Corp, as Sharp has been reportedly reluctant to share its proprietary technology with Hon Hai for fear of leaks.
Moreover, the deal has rekindled worries that as increasingly affluent Chinese companies are on the lookout for favorable investment targets in Taiwan with a global customer base and superior technology portfolios, financially troubled local firms will want to follow in ForEpi’s footsteps in securing much-needed capital and a foothold in the Chinese market.
This would allow Chinese firms to shorten their learning curve and quickly upgrade their technology, while eliminating a major competitor.
Closer cross-strait cooperation could bring benefits to Taiwanese industries if executed carefully and under tight government oversight. However, local firms must consider whether inviting Chinese rivals to be investors will benefit them in the long term.
Perhaps what they need to do is resist the temptation to think that their only hope of salvation is to be found in China.
Because much of what former US president Donald Trump says is unhinged and histrionic, it is tempting to dismiss all of it as bunk. Yet the potential future president has a populist knack for sounding alarums that resonate with the zeitgeist — for example, with growing anxiety about World War III and nuclear Armageddon. “We’re a failing nation,” Trump ranted during his US presidential debate against US Vice President Kamala Harris in one particularly meandering answer (the one that also recycled urban myths about immigrants eating cats). “And what, what’s going on here, you’re going to end up in World War
Earlier this month in Newsweek, President William Lai (賴清德) challenged the People’s Republic of China (PRC) to retake the territories lost to Russia in the 19th century rather than invade Taiwan. He stated: “If it is for the sake of territorial integrity, why doesn’t [the PRC] take back the lands occupied by Russia that were signed over in the treaty of Aigun?” This was a brilliant political move to finally state openly what many Chinese in both China and Taiwan have long been thinking about the lost territories in the Russian far east: The Russian far east should be “theirs.” Granted, Lai issued
On Sept. 2, Elbridge Colby, former deputy assistant secretary of defense for strategy and force development, wrote an article for the Wall Street Journal called “The US and Taiwan Must Change Course” that defends his position that the US and Taiwan are not doing enough to deter the People’s Republic of China (PRC) from taking Taiwan. Colby is correct, of course: the US and Taiwan need to do a lot more or the PRC will invade Taiwan like Russia did against Ukraine. The US and Taiwan have failed to prepare properly to deter war. The blame must fall on politicians and policymakers
Gogoro Inc was once a rising star and a would-be unicorn in the years prior to its debut on the NASDAQ in 2022, as its environmentally friendly technology and stylish design attracted local young people. The electric scooter and battery swapping services provider is bracing for a major personnel shakeup following the abrupt resignation on Friday of founding chairman Horace Luke (陸學森) as chief executive officer. Luke’s departure indicates that Gogoro is sinking into the trough of unicorn disillusionment, with the company grappling with poor financial performance amid a slowdown in demand at home and setbacks in overseas expansions. About 95