WASHINGTON Taiwan's influence over the direction of China's nascent semiconductor is increasingly extending to design services as Taiwan leverages it deep pockets and ability to deliver production-ready chips, according to a study.
In its quarterly report in the global semiconductor industry, the U.S.-Taiwan Business Council (Arlington, Va.) also downplayed recent concerns over the "hollowing out" of Taiwan's technology base as more production and design work moves to mainland China.
Citing increased investment in Taiwan's domestic chip and design infrastructure, Council President Rupert Hammond-Chambers predicted "Taiwan will remain a leader in the global semiconductor industry despite the allure of the China market, and it will continue to be influential in that market's growth."
Nevertheless, Taiwan's semiconductor ties with the mainland continue to expand. For example, Taiwan Semiconductor Manufacturing Co. Ltd . (TSMC) has received Taipei's approval to begin production at its 8-inch fab in Shanghai by the end of the year. TSMC is so far the only Taiwanese chip maker to receive permission to manufacturer in China.
"TSMC will likely have a massive impact on the development of China's chip industry particularly in design," the report concluded.
Continuing tensions between Taipei and Beijing could nevertheless affect other industry segments like packing and testing, the Council warned in its semiconductor report. Taiwan has traditionally withheld investment in China as a poltical weapon. "Further delay in allowing [Taiwanese] packagers and testers to build new factories in China could begin to take its toll, as global competitors rush there to take advantage of low cost labor, which is particularly important in the packaging sector of the industry," the report warned.
The Council earlier said Taiwan would be a key beneficiary of the U.S.-China agreement on eliminating China's value-added tax on chip imports. The group said elimination of the 17-percent VAT tax "removes a key reason for foreign companies to switch semiconductor manufacturing to China, allowing Taiwan companies to retake orders that had been shifted to Chinese foundries."
Separately, reports surfaced Thursday (July 22) that U.S. and Taiwan trade officials are considering talks that would remove Taiwan from Washington's "Special 301" watch list that monitors intellectual property rights violations. Taiwan has been on the list for the last four years.