United Microelectronics Corp (UMC,
UMC said it would not take any action which violated government regulations or undermined shareholder interests but the government said it would investigate the reports.
Singapore's Lianhe Zaobao daily said UMC, Taiwan's second largest chipmaker, is building a US$1 billion eight-inch wafer plant under the name He Jian Technology in the Chinese city of Suzhou.
The Asian Wall Street Journal reported Monday that He Jian Technology was owned by a Virgin Island-headquartered holding company Invest League.
The Journal said heads of both He Jian Technology and Invest League had been UMC officials until last month.
However, UMC said it was "not in a position to interfere with former employees who opt to start their own businesses elsewhere." It added that "future cooperation cannot be ruled out" with ethnic Chinese-owned plants on the mainland.
Yen Chung-kuang, deputy executive of the economic ministry's Investment Commission, confirmed an investigation would be held.
"If the reports turn out to be true, then UMC should be punished," Yen said.
Premier Yu Shyi-kun on Friday announced the government would conditionally lift a ban on Taiwan companies building eight-inch wafer plants on the mainland. A ban would continue on more technologically advanced 12-inch plants.
Taiwan chipmakers would be permitted to build a total of up to three plants before the end of 2005 but only if they used manufacturing equipment phased out in Taiwan.
The lifting of the ban is awaiting the legislature's final approval.
The announcement marked an end to months of controversy and arguments between businessmen who say they were losing ground to competitors operating in China and those who fear lifting the decades old ban would see Taiwan lose its hi-tech edge over the mainland.
Vice Economics Minister Steve Chen (
Referring to reports by foreign press that UMC is building a wafer foundry in China, Chen said that the government expects local manufacturers to abide by the government's regulations governing cross-strait trade and investment.
Chen said that by allowing the "conditional" relocation of domestic manufacturers' wafer fabs to the mainland, the government has demonstrated its sincerity by taking into consideration the manufacturers' global deployment strategies.
The manufacturers are required to abide by the regulations, he emphasized.
Any violator of the regulations will have to pay a fine of between NT$1 million and NT$5 million. For companies sneaking out high technologies and violating the nation's Trade Law, the persons in charge may be sentenced to prison terms of up to two years, he said.
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