Tue, Mar 19, 2002 - Page 1 News List

TSU, Cabinet reach deal on chip issue

FRIENDS AGAIN Gestures by the two sides yesterday allow both sides to save face in a heated dispute that was threatening to drive a wedge between them

By Lin Mei-chun  /  STAFF REPORTER

The TSU and the DPP-led government made amends yesterday after weeks of contentious debate over plans to allow Taiwanese chipmakers to set up eight-inch wafer fabs in China.

The Cabinet said it would give thought to suggestions by the TSU to delay the measure until 12-inch wafer manufacturing in Taiwan is fully ramped up.

The pro-independence party of 13 lawmakers -- an ally of the DPP in the legislature -- in turn promised to call off a protest against the government's plan scheduled for Friday.

The gestures by the two sides allow the TSU and DPP-led government to save face in a dispute that was threatening to drive a wedge between them.

According to TSU lawmakers yesterday, the Cabinet and the party reached an understanding on the hotly debated issue during a meeting on Sunday between Premier Yu Shyi-kun and TSU Chairman Huang Chu-wen (黃主文).

The lawmakers said that in order to maintain political stability, the TSU would call off Friday's protest in recognition of the Cabinet's goodwill.

Hsu Den-koun (許登宮), the TSU legislative whip, said the premier has promised to take the TSU's suggestions seriously into account.

"The Cabinet will especially consider the ability of manufacturers to produce 12-inch wafers [on a large scale] before deciding to relax the ban," Hsu said.

The TSU says eight-inch fabs shouldn't be allowed to go to China until production of the 12-inch wafers -- which are more technologically advanced -- reaches full speed.

In addition, Hsu said, the Cabinet has agreed to develop ways to monitor private-sector investment in China and solicit opinions from the TSU before the measures are finalized.

The Cabinet still plans to announce its final decision on the eight-inch wafer issue before the end of this month, Hsu added. But an announcement won't be made before then as reported earlier, he said.

While TSU lawmakers have agreed to hold off on Friday's protest, they said they could eventually take to the streets should the Cabinet fail to satisfy their concerns.

Taiwan Semiconductor Manufacturing Co (台機電) and United Microelectronics Corp (聯電) -- the world's largest and second-largest chipmakers respectively -- hope to build eight-inch wafer fabs in China.

Opponents of the measure, led by the TSU, say Taiwan would lose its competitiveness if eight-inch fabs migrate to the nation's rival.

But proponents -- mainly from the chip industry -- say they need to set up fabs in China to take advantage of cheap land and labor and a growing market.

Although the TSU has agreed to drop its protest, party officials say its belief that the government should "emphasize `effective management' more than `active opening'" remains intact.

Hsu said yesterday that the government should form a task force to monitor the flow of capital, technology and talent to China. The TSU also plans to propose a national technological security law that would create a monitoring agency.

What's more, TSU lawmakers say the government should penalize Semiconductor Manufacturing International Corp and Grace Semiconductor Manufacturing Co -- two Shanghai chipmakers run by Taiwanese businessmen.

The TSU claims the two companies broke the law by setting up chip factories in China before getting government approval.

But it's not clear whether any laws were broken.

As a result of the Economic Development Advisory Conference in August, the government's cross-strait investment policy of "no haste, be patient" was replaced with "active opening, effective management."

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