The Taiwan government set politics aside yesterday and said it would allow chipmakers to begin applying to invest in China on Monday, just days after Beijing threatened war on the nation over remarks made by President Chen Shui-bian (
"This is a good sign," said Andrew Yang (
It shows he is a very pragmatic person, that he is very much ready to ease tensions."
The Investment Commission under the Ministry of Economic Affairs yesterday said in a statement that chipmakers -- like Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電) -- will be allowed to build a total of three chip-manufacturing plants in China before the end of 2005. Companies have been waiting since last March for a complete set of rules and regulations governing China investment.
The commission's announcement comes just a week after President Chen riled Beijing by saying Taiwan and China are separate countries on either side of the Taiwan Strait.
A strong rebuke from China, which included stepped up calls in Chinese newspapers for military action against Taiwan independence advocates did not rattle chip industry leaders in Taiwan.
"We intend to turn in an investment application in the near future and will not change this plan," TSMC Chairman Morris Chang (
"For TSMC, setting up in China is necessary, very necessary," he added.
The new rules outlined by the government say chip companies may begin submitting investment applications on Monday, Aug. 12, so long as they already have an advanced, 12-inch semiconductor fabrication plant, or "fab," already up and running in Taiwan.
Fears that China might one day develop advanced chip-making technology that would undermine Taiwan's importance in the world computer industry food chain had led some to speculate whether local companies might ever be allowed to invest across the strait.
To ensure Taiwanese firms operating in China maintain strict control over technology and tech-industry workers, the government said any venture must be majority owned and managed by the Taiwan partner, which would be required to file regular reports. Failure to maintain these guidelines will result in the loss of permission to operate in China, according to the MOEA statement.
Officials also fear the loss of investment capital. New chip plants can cost up to US$3 billion today, and to keep these sizable investments in Taiwan, the government said companies could only transfer old equipment from fabs that have been mothballed due to the downturn, not new equipment purchased from the US, Japan or Europe.
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