January 3, 2007 – The Taiwanese government’s recent approval to allow domestic chipmakers to transfer more leading-edge technology to mainland China is necessary to maintain global prospects for the island’s chip industry, according to statements from Premier Su Tsen-chang, reported by several media outlets. However, he also reiterated that wider policies regarding “Taiwan priority” and “Taiwan sovereignty” remain intact.

The government recently lowered its restrictions on chip technology transfers to 0.18 microns, vs. 0.25-microns which had been the policy for several years. But in fact, the revised policy was ready to be adopted two years ago, but was shelved when China’s government passed the Anti-Secession Law, noted Su, according to a report in the Taiwan Economic News.

Mainstream chipmaking in Taiwan has already progressed to 90nm and below on 300mm wafers, so the move of 0.18-micron process technologies is seen as a cost-cutting move and an effort to tap new business opportunities in China. Liu Teh-hsun, vice chairman of the Mainland Affairs Council, added that Taiwan’s semiconductor industry already has 10 300mm fabs, one-quarter of the world’s total. “Impact of the liberalization on domestic semiconductor industry is, therefore, minimal,” said Chen, quoted by the Taiwan paper.

Still, China’s chip industry boasts the highest growth of any region (reaching $335 billion in 2005), with chip firms, led by flagship foundry SMIC, rapidly advancing to 0.18-micron, 0.13-micron, and even 90nm processes. Thus, maintaining the high bar for chip technology transfers constrains the development of Taiwan’s chip industry, Su maintained.

TSMC has been operating 0.25-micron processes on the mainland; applications from Powerchip and ProMOS were yet to be reviewed. TSMC is expected to shift 0.18-micron technology to its 200mm fab in Shanghai, for which it applied in January 2005; Powerchip and ProMOS are expected to quickly apply to the MOEA to set up their own 200mm fabs across the strait.