Taiwan’s main political parties and lawmakers are jockeying for position as they anticipate a change of power next year. The Chinese Nationalist Party (KMT) government is preparing for an early graduation and acting as caretaker over the nation.
While all of this is going on, there is a vital issue for Taiwan’s survival that needs to be addressed: What if one day Taiwan’s core industries are all bought up by China? Would Taiwan still be able to maintain its democracy and freedom?
A few unusual events have recently taken place, each hot on the heels of the other. Taken together, they constitute a serious phenomenon that can no longer be ignored.
The first occurred at the end of last month, when Zhao Weiguo (趙偉國), chairman of China’s flagship semiconductor company Tsinghua Unigroup, called on Beijing to put pressure on Taipei to open up its chip wafer industry, saying that otherwise, Taiwanese brands, Taiwan-manufactured wafers and even the products they are used in should be banned from entering the Chinese market.
The second event was when Tsinghua Unigroup, after failing to take over the US semiconductor company Micron Technology, invested in Powertech Technology — Taiwan’s largest and the world’s fifth-largest packaging and testing company — to the tune of 25 percent of its shares, making it the company’s largest shareholder.
The third event was when Tsinghua Unigroup released a statement saying that if Taiwan relaxed its regulations, it would be willing to discuss a merger with leading chipmaker Mediatek chief executive Tsai Ming-kai (蔡明介). Tsai immediately responded that he was open to deregulation and cooperation between the semiconductor industries across the Taiwan Strait.
Tsinghua Unigroup is a Chinese state-owned company. In recent years it has been making mergers all over the world. At the end of September it entered the US market by buying a 15 percent stake in data storage company Western Digital. It is now the largest shareholder in that company.
In a purely competitive business world, this sort of activity is normal, although when China is involved, nothing is ever pure and simple.
China’s constitution clearly states that Chinese citizens “may not infringe upon the interests of the state, of society or of the collective.” Tsinghua Unigroup is a state-owned enterprise, but its operators have openly demanded intervention by the state to force Taiwan into submission. Given this point alone, there is no need to discuss any other political or military conflicts of interest or contradictions.
Tsinghua Unigroup is just one of many state-owned companies across the Strait, but it is a perfect example of what Beijing is up to. China has used its access to ample capital backing to buy into Taiwan’s top listed companies. We surely need to start asking if we have any other options left if China buys up Taiwan’s main industries.
If we have any doubts, we need to think about some of these issues together, now, especially as the KMT does not seem to care and its government just wants to give up and surrender.
Look at the pithy critique of the KMT legislators accusing the government of messing about and passively waiting for the end of its term. It is not far off.
When Tsinghua Unigroup invested in Powertech, Minister of Science and Technology Shyu Jyuo-min (徐爵民) made a nonsensical pronouncement to the effect that Taiwan’s semiconductor industry must move forward with research and development of more competitive technology.
He then piled idiocy upon stupidity by saying that although China has invested a lot of money in its semiconductor industry, there are a lot of internal problems with it, although they have not yet come to a head, and anyway, the Chinese market accounts for less than 30 percent of the global market, so Taiwan should not be too worried.
Then, as Tsinghua Unigroup voiced its desire to merge with Mediatek in a direct challenge to Taiwan’s ban on investment in Taiwan’s IC design industry by other companies in the same industry, a National Development Council official said that if the competitiveness of companies can be increased through their cooperation, it is a good thing.
Minister of Economic Affairs John Deng (鄧振中) said that when considering the needs of individual companies, his ministry will evaluate what is in Taiwan’s best interests and review the current system.
As the DRAM and LCD screen industries have been reduced to penny shares, the semiconductor industry is the only key industry in Taiwan that remains internationally competitive and profitable. We should not just be eyeing some ambitious industrial prospect far off on the horizon, while ignoring what is right here in front of us.
We should be very concerned for all companies in the semiconductor manufacturing industry. China is in the process of developing its own semiconductor industry, and to close the technological gap, it is attempting to accelerate the process by taking shortcuts.
Beijing has long headhunted talented Taiwanese tech sector workers by offering higher salaries, and now it is going the whole nine yards by buying shares and acquiring companies. Its ultimate goal is to own core technology.
Absurdly, the government seems to have absolutely no sense of danger, and it is not seeking any effective countermeasures. Its failed policies have caused earnings on the Taiwanese stock market to drop, making it even cheaper for China to buy up Taiwan.
Micron Technology has set a good example by rejecting Tsinghua Unigroup. For Taiwan’s mainstream industry to maintain its global leading edge, it is not necessarily wrong to seek international mergers. The critical question is with whom.
China continues to threaten Taiwan’s very existence. Taiwan cannot be without effective measures to protect itself. Regardless of who the counterpart might be, it should not allow core technology to be poached.
Failure to grasp these two principles will make it impossible to increase Taiwan’s competitiveness, and it could even end up destroying the nation.
Translated by Clare Lear
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