Taiwan threatens SMIC CEO with jail, says report

LONDON -- Richard Chang, chairman, president and chief executive officer of Chinese foundry chip supplier Semiconductor Manufacturing International Corp. (SMIC), has reported the receipt of a fax from the Taiwanese government threatening him with a US$750,000 fine and a two-year jail term, according to a BusinessWeek Online report.

Chang was reported as saying that Taiwanese government had accused him of violating Taipei's investment rules in China.

Taiwan has set rules for Taiwanese companies investing in mainland China but SMIC is a Cayman Islands registered company with its operational and manufacturing base in Shanghai. Chang grew up in Taiwan but is now a U.S. citizen, and denied any wrong-doing according to the report.

"They're just trying to harass us. They don't want to see China have a semiconductor business," the report quoted Chang as saying.

Taiwan is home to the two largest chip foundries; Taiwan Semiconductor Manufacturing Co. Ltd. and United Microelectronics Corp. SMIC is a startup company that has spent money on a grand scale to get foundry manufacturing up and running in China. SMIC is still small compared with TSMC and UMC.