Thu, Jan 17, 2013 - Page 3 News List

Decline in Japan’s chip industry could help Taiwan: report

By William Lowther  /  Staff reporter in Washington

The decline of the Japanese chip industry has the potential to bring a wealth of new technology and many new outsourcing contracts to Taiwan, the US-Taiwan Business Council has said in a report.

In its quarterly Taiwan Semiconductor Report released this week, the council also examines the dispute over the Diaoyutai Islands (釣魚台).

“Japanese chipmakers have fallen so far behind their global rivals, and the pace of deterioration has increased so much, that soon there may not be a question of how much to outsource — they will not have any other choices left,” the report said.

“How much outsourcing might be on the way to Taiwan companies? The potential appears huge” the report said.

Taiwan’s chip executives expect the coming wave of outsourcing from Japan to cover high-end and low-end chip fabrication, as well as in chip assembly, but nobody is able to give any estimates for how much or how fast it might come, the report said.

“Japan’s chip industry is falling apart — after years of decline, the end is near,” it said.

Japanese companies have been slow to outsource chip production to Taiwan, but they will have to do more of that in the future, the report said.

It also says that because of the dispute over the Diaoyutais, which are referred to in Japan as the Senkakus, Japan is replacing Taiwan as the most likely focus of a Chinese attack in the Asia-Pacific region.

“While they [the islands] appear to be just a group of rocks in the middle of nowhere, with population zero, they represent a perceived national humiliation that unites ethnic Chinese from the PRC [People’s Republic of China], Hong Kong and Taiwan against Japan,” the report said.

“The emotional pull of the islands is so powerful that even if Beijing wanted to avoid a conflict with Japan over them, it might have a hard time doing so,” it said.

Where once rival political systems separated China and Taiwan, the general goal to become rich and powerful unites them today in business and cultural affairs, the report said.

“The old fears — that Taiwan could become a target if problems in China prompted it to seek a conflict to drum up patriotism — have faded, as Chinese nationalists now have a new focus and pariah in the Diaoyu[tai] Islands and Japan,” the report said.

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