SAN JOSE, Calif. Taiwan’s government is not likely to relax semiconductor industry investments or export control policies in China in the near term, because of political confusion on the island, according to the U.S.-Taiwan Business Council.
The U.S.-Taiwan Business Council (Arlington, Virginia) blamed the problem on Taiwan’s non-government delegations and opposition party leaders. These factions have undermined Taiwan’s president and hurt the island’s chip efforts in China, according to the organization. The US-Taiwan Business Council is a membership-based non-profit association founded in 1976.
At present, Taiwan’s government does allow Taiwan-owned fabs in China, but these plants cannot process wafers below 0.25-micron geometries, according to the island’s export control laws. And Taiwan’s chip packaging and testing houses are not allowed to begin operations in China.
Meanwhile, the Chinese government has recently interwoven the visits of former Kuomintang (KMT) Chairman Lien Chan and Peoples First Party (PFP) Chairman James Soong, this past spring, with a series of trade initiatives designed to focus on core political constituencies in Taiwan, such as southern fruit farmers, according to the U.S.-Taiwan Business Council.
While the US-Taiwan Business Council said it welcomes dialogue between China and Taiwan, the organization claims that it is clear that these initiatives are designed to undermine the position of Taiwan’s President Chen and the ruling DPP. If the DPP is to proceed with further liberalization in areas such as chip packaging and testing as well as 0.18-micron chip manufacturing, it will require a level of control over the process, according to Council President Rupert Hammond-Chambers.
“In light of these and other events, the [DPP and President Chen have] become even more cautious with regards to economic interaction with China, and it will pursue policies to address the seemingly incremental erosion of its authority over cross-Strait trade matters, including continuing to hold back Taiwan chip testing and packaging firms from investing in China and further limiting chip manufacturing technology transfers,” he said in a statement.
“The Chen administration is considering the broader implications of China’s detente with Taiwan’s opposition party leaders, its unwillingness to engage the Chen administration, and the impact this is having on the ruling party’s domestic authority and standing,” said Hammond-Chambers. “The Council is concerned that any process to undermine the Chen administration’s authority over trade negotiations will result in a political backlash in Taiwan that will slow or even halt incremental trade liberalization across the Taiwan Strait.”
There are other issues as well. “The US-Taiwan Business Council believes that normalized trade across the Taiwan Strait will result in reductions in cross-Strait political tensions, increased efficiencies for Taiwan companies, and therefore price, quality, and time of delivery improvements for the myriad of U.S. companies that participate in the integrated technology supply chain that links the U.S., Taiwan, and China,” said Hammond-Chambers.
“In addition, economic integration should also contribute greatly to bridging the political gap that remains between the two, and offer positive momentum to a relationship that has undergone an extended period of strain,” he added.