The announcement was made at a press conference following a cross-agency review. Powerchip and Promos planned to set up 8-inch made-to-order wafer foundries in China using 0.25-micron manufacturing technology, while ASE planned to purchase Global Advanced Packaging Technology Ltd., a Chinese low-end chip tester and packager, for US$60 million. According to a Dec. 19 report in the Chinese-language Economic Daily News, the Powerchip and Promos projects were submitted to the MOEA in December 2004, that from ASE in October 2006.
This is the first approval following the Dec. 14 MOEA announcement of new principles and regulations drawn up for investments in China, which stipulated that related documents and cross-agency reviews were required if domestic companies planned to invest or increase their capital in China beyond US$100 million. Such procedures were also needed for increasing capital by more than US$60 million to current investments totaling over US$200 million, or for "core industries" such as 8-inch wafer fabs, packaging and testing, and small-sized thin film transistor-liquid crystal displays. Before this approval, Taiwan Semiconductor Manufacturing Co. was the only domestic company to have set up an 8-inch wafer foundry across the Taiwan Strait, which followed review and approval in 2003.
According to the report, ASE Chairman Jason Chang, Powerchip Chairman Frank Huang and Promos Chairman Chen Min-liang attended the Dec. 18 MOEA-convened cross-agency review in person to present the investment plans. The review panel included Mainland Affairs Council Chairman Joseph Wu, Council for Economic Planning and Development Chairperson Hu Sheng-cheng, National Science Council Chairman Chen Chien-jen, Council of Labor Affairs Minister Lee Ying-yuan and Financial Supervisory Commission Vice Chairperson Susan Chang, as well as Chen Ruey-long.
Chen said that approval of all the investments was based on the "proactive management, effective liberalization" policy announced by President Chen Shui-bian at the beginning of 2006, the Chinese-language Liberty Times reported Dec. 19. The MOEA minister stated that the three companies were also approved in accordance with relevant industrial and financial regulations. "Permission for their China-bound plans would not impact Taiwan's economy," he said, adding that jobs will not be lost but, rather, increase as human resources would be needed for new 12-inch fabs in Taiwan following dismantling of the current 8-inch ones. Other advantages included a transformation of manufacturing equipment, which would bring new prospects to the domestic semiconductor sector.
To date, Promos has two 8-inch and two 12-inch wafer fabs in Taiwan, while Powerchip has one 8-inch and three 12-inch wafer foundries. ASE, which was in the news recently following announcement that U.S. private equity firm Carlyle Group had expressed interest in buying all its stock, has two testing and packaging plants in Taiwan with total investment of more than US$3 billion.
The three companies promised to increase their Taiwan investments while heading across the Taiwan Strait. Powerchip, for example, would invest around US$14 billion over four to five years, Promos would set up a 12-inch wafer plant at the location of its current 8-inch plant and increase investment by US$2.5 billion, and ASE would invest US$3.07 billion on the island and create 20,000 jobs, the Economic Daily News reported.
Chen said that his ministry would put high priority on setting up 8-inch wafer fabs with 0.18-micron manufacturing technology in China, according to a Nov. 15 report by the semi-official Central News Agency. The U.S-Taiwan Business Council was also quoted, saying the tendency to relax investment in China was "an incremental approach to liberalization of Taiwan's cross-strait technology relationship with China."
Following the latest approval of 0.25-micron processing for export to China, light was also shed on the possibility of relaxation for 0.18-micron technology. The Economic Daily News Dec. 21 reported Chen as saying that, based on current regulations, the adjustment of manufacturing process would not require a review of government policy, while Vice Economics Minister Shih Yen-hsiang was quoted as saying the 0.18-micron process would not be relaxed by the end of this year, since more cross-agency consultations were needed.
In related news, figures released Dec. 20 by MOEA indicated that Taiwanese investments in China in 2006 focused on electronic component manufacturing, such as computer, communication, audio and video equipment manufacturing. These categories, representing 34.45 percent of the combined investment in China, totaled more than US$2.2 billion between January and November.