Recently, the nation's chipmakers and wafer testing and packaging firms have turned a corner. Wafer testing and packaging firms' orders are lined up all the way into the fourth quarter. Big domestic manufacturers like Advanced Semiconductor Engineering Inc and Siliconware Precision Industries Co have orders through October.
It is important to keep in mind where the chip industry's good fortunes came from. Since 2003, the government has been unjustly labeled as "isolationist" and "conservative" for not allowing domestic wafer testing and packaging firms to move to China. If the government had allowed such firms to move to China four years ago, what would have happened?
Undoubtedly, China today would be blanketed by the Taiwanese companies, whose capacity would have grown exponentially. This in turn would have led to fierce competition and price wars, and ultimately a precipitous drop in profits. Of course, that would have been great for China, but China-based Taiwanese businesspeople would have suffered tremendously.
Given the success of Taiwan's two top chipmakers -- Taiwan Semiconductor Manufacturing Corp and United Microelectronics Corp -- we should thank the Taiwan Solidarity Union (TSU) for spearheading efforts to prevent domestic chipmakers from moving to China in 2002. The output of TSMC's two 12-inch wafer factories has skyrocketed, with chips produced using its cutting-edge 90-nanometer technology comprising 23 percent of revenues.
The success of the nation's original equipment manufacturing (OEM) chipmakers has also fed a recent boost in wafer testing and packaging orders. In retrospect, had there been no protest against chipmakers' plans to relocate to China four years ago, if the Ministry of Economic Affairs (MOEA) had had its way, or if the government had given in to local chipmakers' demands to go to China two years ago, then today China would be sitting firmly atop the global wafer industry.
However, that is not the case today. In fact, China's major chipmaker Semiconductor Manufacturing International Co was in the red this quarter to the tune of US$8.7 million, and experienced a loss of US$14.87 last quarter.
It is not a completely bad thing for manufacturers to move to China. The conditional liberalization of the chip industry in 2002 -- which allowed some firms to open plants in China -- was a success story. Even chipmakers themselves will privately say that such "managed" liberalization was the right way to go.
Building on the success of that liberalization precedent in 2002, the Cabinet recently announced that it will move toward liberalizing wafer testing and packaging services and small-sized panel production. But the MOEA's application criteria are still too general, leading to many problems in implementation. Moreover, the MOEA lacks effective management practices regarding the transfer of certain technologies.
The government need not rush to follow up on the recent Chinese Nationalist Party (KMT)-Chinese Communist Party (CCP) economic forum, for that would only endorse China's attempts to influence Taiwanese politics through economic means. If 45 Taiwanese business representatives can force the Taiwanese government to be more "pragmatic" just by lining up to shake hands with President Hu Jintao (
The government should manage cross-strait liberalization at its own pace. Otherwise, China would only need to host a few more KMT-CCP forums to "de-politicize" Taiwan without firing a single bullet.
Huang Tien-lin is a national policy adviser to the president.
Translated by Max Hirsch
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
If you had a vision of the future where China did not dominate the global car industry, you can kiss those dreams goodbye. That is because US President Donald Trump’s promised 25 percent tariff on auto imports takes an ax to the only bits of the emerging electric vehicle (EV) supply chain that are not already dominated by Beijing. The biggest losers when the levies take effect this week would be Japan and South Korea. They account for one-third of the cars imported into the US, and as much as two-thirds of those imported from outside North America. (Mexico and Canada, while
I have heard people equate the government’s stance on resisting forced unification with China or the conditional reinstatement of the military court system with the rise of the Nazis before World War II. The comparison is absurd. There is no meaningful parallel between the government and Nazi Germany, nor does such a mindset exist within the general public in Taiwan. It is important to remember that the German public bore some responsibility for the horrors of the Holocaust. Post-World War II Germany’s transitional justice efforts were rooted in a national reckoning and introspection. Many Jews were sent to concentration camps not
RSS