Taiwanese chipmakers call for fewer restrictions

By Jim Carbone -- Purchasing, 11/1/2007 9:40:00 AM

The Taiwanese government needs to relax restrictions on chip investment in China, according to Taiwan's two largest chipmakers. 

Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) say the current government restrictions on investment in China could cause the companies to lose their competitive edge because of a ban on building state-of-the art production lines on the mainland. 

Taiwan only permits semiconductor manufacturers to invest in 0.18mm chip production. The government fears it may lose its advantage in the global semiconductor industry by allowing more advanced semiconductor technology to be exported to China. However TSMC and UMC say Intel is planning to upgrade its Chinese chip facilities to 90- and 65-nm production and the two companies say they need to upgrade as well to stay competitive. 

The appeals by the companies followed a recent district court ruling acquitting UMC's former chairman of breaking a Taiwan law by illegally setting up a chip company in China. 

Some Taiwanese firms have tried to get around the government's investment restrictions by seeking public listings in Hong Kong or setting up subsidiaries in third countries. 

TSMC is the world's largest producer of made-to-order chips, followed by UMC.