Taiwan delays decision on China chip projects

Taiwan's government has delayed making a decision on whether or not to recommend lifting restrictions on investments in semiconductor-related projects in China, the Ministry of Economic Affairs (MOEA) announced Thursday.

A decision on whether to lift restrictions on chip-related investments, including eight-inch wafer fabrication plants, in China is expected to be made at a government meeting scheduled to be held in two weeks' time, MOEA said. A decision had been expected to be made this week.

A decision was postponed because the chip industry is considered Taiwan's most important industry and there is concern among some in Taiwan that easing restrictions on chip investments could mean that much of the country's chip industry could move across the Taiwan Strait to China.

However, talks on whether to ease restrictions have focused on eight-inch wafer technology. The government is not expected to ease curbs on more advanced 12-inch wafers, which offer a 2.5-fold increase in production capacity and significant cost savings compared with eight-inch wafers.

Mainland Chinese chip-makers, like Shanghai-based Semiconductor Manufacturing International Corp., only have eight-inch wafer fabs that use a 0.25-micron process. By comparison, Taiwan-based United Microelectronics Corp. (UMC) and Taiwan Semiconductor Manufacturing Co. (TSMC) have already begun production of 12-inch wafers using a more advanced 0.13-micron manufacturing process at facilities in Taiwan. UMC and TSMC both operate several eight-inch wafer fabs in Taiwan as well.

While no decision regarding eight-inch wafer projects was made Thursday, the government has advanced a proposal to lift restrictions on investments in projects to manufacture LCD (liquid crystal display) screens in China. The recommendation needs the approval of Taiwan's cabinet before it goes into effect.

Earlier this month, Taiwan's government eased curbs on investment in projects to manufacture in China 122 types of technology products including notebook and desktop computers and 3G (third-generation) mobile handsets.

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