While much of Taiwan's high-tech industry clamors to cross the Strait to do business in China, Taiwan Semiconductor Manufacturing Co (TSMC,
Chang said his company planned to wait at least three years before making any significant investment in China, because of political corruption on the mainland and US Defense Department technology transfer regulations.
"Even if the government suddenly became very cooperative and said `you can go [to China], you can do anything you want, you can build a 12-inch [wafer] plant over there' ... I would not go to China," Morris Chang (張忠謀), chairman of TSMC told a group of executives at the European Council of Commerce and Trade yesterday.
Chang cited an unstable political environment and outright corruption as two leading reasons to delay setting up manufacturing plants in China.
Last year, Chinese officials lured a number of Taiwanese manufacturers to the Pudong (
He also pointed out the low regard TSMC places on building political connections, an aspect of his company which "in Taiwan has perhaps turned out to be a slight disadvantage, but in the mainland, I think it could be a much bigger disadvantage."
Cronyism and political corruption are a part of business throughout Asia, he said, including Taiwan. But no where near as much as in China. The attention many companies pay to building political connections seems unreasonable, he said, especially when newly announced projects come tagged with the names of political connections rather than the strength of technology or sum of financial backing.
In one of last year's highest profile cases of high tech investment in China, a US$6.4 billion partnership to build six semiconductor manufacturing plants, the son of Formosa Group chairman Wang Yung-ching (
"Their very first act, before they even laid a single brick, was to advertise that among the main investors, one of the promoters was the son of [Chinese president] Jiang Zemin (
"My goodness, why should that be so important? I mean, the fact that it was considered important left me very cold. If that kind of stuff is important, then I don't want to go there."
According to Chang, technology transfer is also an issue worthy of consideration. For reasons of national security, the US Department of Defense will not allow the most sophisticated semiconductor manufacturing equipment to be sold to China. Currently, the smallest die-size allowable is .25 microns, yet TSMC and rival United Microelectronics (聯電) have already moved up to .18 micron and even .13 micron technology in Taiwan.
Also most plants currently under construction in China today use older 8-inch silicon wafer technology as compared to TSMC's recent opening of its state-of-the-art 12-inch wafer plant in Tainan.
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