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Taiwan mulling conditional China investment in IC design sector

Taiwan mulling conditional China investment in IC design sector

Economics Minister John Deng said Thursday that the government is planning to allow Chinese investors to buy stakes in local integrated circuit design companies under certain conditions.

Speaking in a meeting of the legislative Economics Committee, Deng said the Ministry of Economic Affairs (MOEA) is considering allowing Chinese firms to invest in Taiwan's IC design business, but would impose some conditions.

For example, he said, the government would not allow Chinese investors to hold a majority stake in Taiwanese IC design companies and strategic partnership proposals would have to be submitted to the MOEA for approval.

In addition, Taiwanese IC designers seeking to sell shares to Chinese investors would have to ensure that there are no leaks of trade secrets or any brain drain to China, Deng said.

He said Taiwanese IC designers who sell shares to Chinese partners will be required to maintain domestic investment and their Taiwan workforce.

China's Tsinghua Unigroup, a high-tech group controlled by Chinese authorities, has repeatedly expressed interest in buying a stake in MediaTek Inc., Taiwan's largest IC designer, which specializes in smartphone chip design.

MediaTek has said that it is open to any form of cooperation with Chinese investors and has been urging the government to lift the ban on Chinese investments in the local IC design sector.

According to the MOEA, Taiwan ranks as the second largest IC designer in the world, after the United States, and tops the ranks in terms of contract chip manufacturing, and IC packaging and testing services.

Currently, Chinese investors are conditionally allowed to buy shares in Taiwan's contract chip makers and IC packaging and testing service providers, but not to hold a controlling stake.

Deng said that in order to increase their share in the huge and fast growing China market, Taiwanese IC companies, including IC designers, will have to forge strategic partnerships with their Chinese counterparts, as several global heavyweights such as Intel Corp. and Qualcomm Inc. have done.

With China gearing up to build its own IC business, it is expected to gain a 31 percent share of the global IC market by 2018, compared with about a 20 percent share in 2009, the MOEA has forecast. (By Huang Chiao-wen and Frances Huang)


Updated : 2021-09-28 09:34 GMT+08:00