The government is considering easing restrictions on Taiwanese semiconductor investment by allowing manufacturers to build 12-inch wafer fabs in China.
Industrial Development Bureau Director-General Woody Duh (杜紫軍) said yesterday the bureau would hold a meeting next month to review the government's China-investment policy, including the ban on local chipmakers building 12-inch wafer fabs in China.
The government will seek to comply with the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies in dealing with the issue, Duh said, adding that “it will take some time to arrive at a final decision.”
On Friday President Ma Ying-jeou (馬英九) said in a meeting with Michael Splinter, chairman of the US-based Applied Materials, that Taiwan “would not rule out” allowing companies to set up 12-inch wafer fabs China.
The government currently only allows Taiwanese manufacturers to build 8-inch wafer fabs in China amid concerns over advanced technology transfers.
The planned easing has raised concern among the opposition, with the Democratic Progressive Party (DPP) saying yesterday it objected to lifting the ban until the government obtained public consensus on the issue.
“Allowing the semiconductor industry to invest in China has always been a very sensitive issue, since liberalizing the industry would have a profound impact on Taiwan's overcall economic development,” DPP spokesman Cheng Wen-tsang (鄭文燦) said.
“During the eight years of DPP government, we made careful assessments and held public forums before allowing an industry to invest overseas,” he said. “We wanted to make sure that liberalizing technology investments would not hurt Taiwan's competitiveness and leading position in the global market.”
As a result, the then-DPP government chose to retain 12-inch wafer fab investment in the country, allowing Taiwan to become the largest processor of 12-inch wafers and ensuring that investments in the semiconductor industry continued to thrive.
“If the government lifts the ban for 12-inch wafer fabs without careful planning and consideration, it could lead to a brain drain and loss of technology,” Cheng said.
Cheng said that if Taiwan were to lose its leading position, “it would be replaced by the Chinese semiconductor industry, and we wouldn't get a share of China's domestic market.”
Saying that 12-inch fabs are one of Taiwan's few high-tech assets, Chinese Nationalist Party (KMT) KMT Legislator Lo Shu-lei (羅淑蕾) also urged the government to reconsider the idea, “or Taiwan may lose its competitive edge over China.”
Meanwhile, KMT caucus whip Yang Chiung-ying (楊瓊瓔) said the caucus would support easing the ban so long as Taiwan's economic security was ensured.
Yang said globalization had made it hard to prevent the flow of capital across borders, adding that “the government should not prohibit businesses from exploring overseas markets.”
However, the administration should set up conditions to ensure that liberalization would contribute to Taiwan's economic development, she said.
KMT Legislator Lin Tsang-min (林滄敏) also supported easing the ban on 12-inch fab investment. Taiwanese manufacturers should devote more resources in developing more advanced technologies and relocating less-advanced fabs to China, he said.
Taiwan's semiconductor manufacturers use different process technology in processing 12-inch wafers. Major chipmakers like Taiwan Semiconductor Manufacturing Co (台積電) use 0.13-micron process technology or more advanced technologies such as 0.11-micron, 90-nanometer and 65-nanometer technologies to cut chips from 12-inch wafers.
They are also developing next-generation technologies by shrinking the circuit width to as small as 40 nanometers to process 18-inch wafers.
John Hsuan (宣明智), the government's designated head of Taiwan Memory Co (台灣記憶體公司), said he did not see any substantial reason for the government to carry on the restriction.
“It is a global trend to build 12-inch fabs in China. Chip giant Intel Corp owns a 12-inch fab in Dalian, northeastern China,” said Hsuan, who is also honorary vice chairman of the nation's second-biggest contract chipmaker, United Microelectronics Corp (聯電).
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