Taipei, Taiwan – The Taiwanese government has relaxed a ban on fab investment on the mainland, according to reports from the Associated Press.

Premier Yu Shyi-kun said Taiwanese companies will be allowed to produce 200mm wafers in China if they begin making 300mm wafers in Taiwan.

“With this policy … we hope to build Taiwan into the world’s manufacturingUcenter of 12-inch wafers,” Yu said at a late night news
conference, according to the AP.

The move followed months of heated debate on the push to move 200mm manufacturing to China. Business leaders are eager to set up factories in China to help them keep competitive edge and cut costs. But many others are concerned that easing the ban will weaken the island’s already faltering economy and give China added political leverage over the island.

Taiwan’s two largest foundries – Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. – are expected to be at the forefront of investment into China.

With Taiwan and China’sIentry into the World Trade Organization, which sets rules for global trade, the island has gradually eased restrictions and moved toward normalizing trade relations with its
communist neighbor.