November 28, 2007 – Taiwan’s Ministry of Economic Affairs is once again urging domestic chipmakers to support Taiwan’s IC industry by investing “as much as possible” in tools from local equipment suppliers, in an effort to try and replicate success in marrying Taiwan’s LCD manufacturers with local suppliers, notes the Taiwan Economic News.

According to the paper, Economics Minister Steven Chen recently sat down with a group of Taiwanese chipmakers, including TSMC, UMC, Powerchip, Nanya, and Inotera, to gauge their interest in sourcing their tools locally, and Frank Huang, chairman of both the Taiwan Semiconductor Industry and Powerchip, has been tabbed to help coordinate such efforts. Taiwan’s chipmakers spend about $7.5B annually on mostly imported equipment and parts for their 14 300mm fabs and 20 200mm fabs, according to numbers from the MOEA’s Industrial Development Bureau.

The government-backed Industrial Technology Research Institute (ITRI) will meet next month to help set up a model for supply transactions between the island’s chipmakers, chip assemblers, equipment suppliers and components suppliers. The paper notes that the efforts will start with backend suppliers, an area the local industry is more versed in, before expanding into the island’s “fledgling” frontend tool sector.

The paper noted, though, that it is likely the efforts to forge closer ties between domestic chipmakers and suppliers is unlikely to meet expectations, since the chipmakers have deep enough pockets to acquire more expensive foreign equipment, whereas the local LCD panel makers “in the red” are more motivated to save money and buy from local suppliers, who are seen expanding to 50% penetration in 2008 from just 10% two years ago.