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Taiwan OKs China investments by two DRAM makers

28 December, 2006

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TAIPEI: Taiwan's government on Wednesday gave final approval for Powerchip and ProMOS to set up chip plants in China, marking the biggest opening to date for Taiwan's microchip industry on the mainland.

The Investment Commission under the Ministry of Economic Affairs said it had approved the firms' applications, which allows them to move older 8-inch silicon wafer technology to China. The nod-through follows last week's go-ahead for the move by an inter-departmental committee.

The only Taiwan firm operating officially in China at present is Taiwan Semiconductor Manufacturing Co the world's largest contract chip maker. The industry has pushed for years for permission to invest in China, where its rivals like South Korea's Samsung Electronics and Hynix Semiconductor already enjoy the advantages of cheap labour and proximity to Chinese customers.

But the Taiwan government has been reluctant to let what it sees as strategic industries, including semiconductors, become economically dependent on a political opponent. Powerchip Semiconductor Corp plans to invest $401 million to open its first factory in China, while ProMOS Technologies wants to invest $365 million there, the commission said in a statement.

While Powerchip and ProMOS declined to detail their product strategy, analysts say they would make lower-end chips to help meet China's soaring demand for home appliances, printers and handheld devices, which usually require less demanding technology.

The two companies, which specialise in dynamic random access memory (DRAM) chips mainly for personal computers, would still make their cutting-edge, 12-inch wafers in Taiwan. The commission also gave permission to Advanced Semiconductor Engineering Inc (ASE) the world's biggest chip testing and packaging company, to invest $60 million to acquire Global Advanced Packaging Testing Ltd in China.

Courtesy: Reuters, 2006.

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