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New regulation on chip making draws criticism

Staff Reporters

The Cabinet's decision to allow the nation's chipmakers to apply to manufacture chips in China using more advanced technology drew criticism from the pan-green camp yesterday, while the pan-blue camp applauded the announcement.

Former president Lee Teng-hui (李登輝) criticized the government loosening regulations on investment in China as "dealing with problems on an ad hoc basis."

"After [manufacturing] technologies Taiwan has developed over the past 50 years are taken to factories in China, they [Chinese manufacturers] will acquire [the technology] one day," Lee said during a lecture at the Lee Teng-hui Academy yesterday.

"Once they learn the skills, some traditional [Taiwanese] industries will not be able to survive [in China] and have to come back to Taiwan," Lee added.

Lee told the academy that he was against the policy, adding that the nation could lose its "substance and opportunity" as capital will be taken to China rather than coming to Taiwan.

Lee's fierce criticism came after the Ministry of Economic Affairs (MOEA) and the Mainland Affairs Council announced on Friday that Taiwanese chipmakers would be able to apply for permission to make chips with 0.18-micron processing technology in China instead of continuing to use the old 0.25-micron processing technology.

The new policy will influence Taiwanese chip manufacturers' investments in China, such as those by the world's biggest chipmaker, Taiwan Semiconductor Manufacturing Co.

The policy was first proposed by former premier Frank Hsieh (謝長廷) during his term as premier last year, but was not approved by the government at the time.

Hsieh yesterday said he could not comment on the news because he was not the premier anymore.

He said, however, that the policy had not been approved by the government in the past because he was "not fully authorized" by the president, without elaborating.

The Taiwan Solidarity Union (TSU) did not welcome the change in policy.

TSU Legislator Huang Chung-yung (黃宗源) said the party was against the policy because the government does not have sound measures to protect manufacturing technologies taken to China.

He said he feared unemployment could worsen if Taiwanese chipmakers' supply chains also move to China, adding that the caucus could boycott related budgets proposed by the MOEA.

TSU Legislator Lo Chih-ming (羅志明) said he felt President Chen Shui-bian (陳水扁) and Premier Su Tseng-chang (蘇貞昌) were "dancing the tango."

"Otherwise, Chen would not have slated Su to oversee that policy change," he said.

Chinese Nationalist Party Lawmaker Tseng Yung-chuan (曾永權) called the policy a "late justice," saying that the government's earlier strict policy of investment in China was a "failure."

He urged the government to accelerate the relaxing of other regulations for Taiwanese investment in China as it would be beneficial to the nation.

Premier Su Tseng-chang (蘇貞昌) yesterday defended the Cabinet's decision, saying that the new policy would help local manufacturers retire or renew their old equipment.

"This policy will encourage more local chip manufacturers to keep their roots in Taiwan while they will be making money all over the world," Su said when approached by the press for comments yesterday.

The policy was "carefully discussed before it was announced," he said, adding that Taiwan is the world's leading chipmaker and that the government intends to keep it that way.

Asked whether the government would lift the ban prohibiting investment in China in excess of 40 percent of a company's total value, Su replied that there had been no new developments on that issue.

Minister of Economic Affairs Steve Chen (陳瑞隆) yesterday also rebuffed criticism.

"In the high-tech industry, Taiwan is still a leader and we shall not worry about the problem because it isn't yet a problem," he said. "This policy fits the development needs of chip manufacturers and those of Taiwanese companies, which want to make more money."
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