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Beijing Tax-breaks Lure Chip Giant of Island Province
Taiwan's microchip "godfather" said for the first time on Sunday that his company, the island's leading microchip-maker, is set to invest in the mainland. Morris Chang, chairman of Taiwan Semiconductor Manufacturing (TSMC), told a panel of economic development advisory council: "It's about time for TSMC to launch operations in the mainland."
Mr Chang had said his company would not invest in the mainland during the next four to five years. "But when the mainland authorities provide such incentives like tax breaks as well as sufficient supplies of hi-tech personnel and water and electricity, and our competitors started to use these advantages, we would lose our competitive edge if we do not follow suit," he said.
Mr Chang did not specify a timetable for any mainland investments by TSMC.
The economic development advisory council decided earlier this month to scrap a blanket ban on investment projects in the mainland valued at more than US$50 million, in favour of a case-by-case evaluation.
Mr Chang hailed the lifting of the ban, which is to be replaced by a policy called "active opening, effective management".
The current policy bans single investments worth more than US$50 million and those in the infrastructure and advanced technology sector. However, such investments are often made through overseas subsidiaries of Taiwan companies.
The go-slow policy on investment has been in place since 1996. However, with or without local authorities' approval, Taiwanese firms have poured about US$70 billion into the mainland since authorities allowed civil exchanges between the two sides in 1987.
Mr Chang's remarks came a week after a report that TSMC's rival United Microelectronics Corp (UMC) formed a joint venture in Chinese mainland with Hon Hai Precision Industry to manufacture components for mobile phones.
In an interview with the China Times, UMC chairman Robert Tsao said the company's subsidiary, World Wiser Electronics would join forces with Hon Hai in making mobile phone parts in Beijing.
He declined to confirm reports that the alliance included building an eight-inch wafer foundry plant with Hon Hai in Shenzhen in southern China.
TSMC's net profit in the six months to June dived 63 per cent to US$265 million due to a global recession in the industry.
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