Taiwanese Chipmakers Struggle as Government Turns Away Mainland Funds
Yicai Global
/SOURCE : Yicai
Taiwanese Chipmakers Struggle as Government Turns Away Mainland Funds

(Yicai Global) June 2 -- The Taiwanese chip manufacturing industry, once a world leader, is struggling due to a ban on investment from mainland companies.

When asked if Taiwan would lift the ban on investments by mainland semiconductor companies, Mr. Walter M. S. Yeh, executive vice president of Taiwan External Trade Development Council, refused to give a direct answer to Yicai Global at the 2016 Taipei Electronics Show.

Companies from the mainland are allowed to acquire minority stakes in semiconductor businesses such as chip packaging and testing. Beijing-based chip giant Tsinghua Unigroup Ltd. purchased a 25 percent state in two Taiwanese chip packaging and testing firms, Powertech Technology Inc. and ChipMOS Technologies Inc., last year.

However Taiwanese authorities have imposed a strict ban on investment in local chip design companies such as MediaTek Inc. and Novatek Inc. and chipmakers such as Sitronix Technology Corp.

Many industry leaders want the government to change its stance on the matter and allow them to use funding resources from mainland China and foster strong business ties with clients there. "We welcome investors from the mainland. There's no question about it," said Sitronix CEO Vincent Mao.

"The mainland will develop their own technology and design, so we had better join them before they do it," said Mr. Khein-Seng Pua, chairman of Phison Electronics Corp., a Taiwanese company specializing in control flash drive chip design.

Taiwan holds about 50 percent of the global chip packaging and testing market. The bulk of the market share belongs to ASE Group and Siliconware Precision Industries Co., which have a combined annual sales revenue of USD10 billion. However the situation is changing. Jiangsu Changjiang Electronics Technology Co. is competing with Siliconware Precision for third place in the global market, following its acquisition of Singapore-based STATS ChipPAC Pte. last year.

Follow Yicai Global on