May 25, 2006 – Taiwan’s top chip assembly houses are lining up to get government approval to open facilities in mainland China, following the government’s decision to limit restrictions on transfers of some technologies, reports the Taiwan Economic News.

Siliconware already has requested approval, and Advanced Semiconductor Engineering (ASE) Inc. and King Yuan Electronics Co. Ltd. are expected to quickly follow suit, the paper noted. Despite government restrictions on semiconductors — which has caused Taiwan firms to lose ground to companies including Amkor Technology Inc. and STATS ChipPAC Ltd. — many island assembly firms, including Siliconware, ASE, King Yuan, ChipMos Technologies Ltd., Power Technology Inc. (PTI), Chipbond Technology Corp., International Semiconductor Technology Ltd., and Greatek Electronics Inc., already operate facilities on the mainland that focus on transistors, and are expected to retool those facilities to chip production by the end of next year.

The paper noted that much of the new business from China is expected to come from Semiconductor Manufacturing International Corp. (SMIC), Taiwan Semiconductor Manufacturing Co.’s (TSMC) Shanghai operation, He Jian Technology (Suzhou) Co. Ltd., Shanghai Grace Semiconductor Manufacturing Corp., Hynix Semiconductor’s mainland Chinese branch, and Shanghai Hua Hong NEC Electronics Co. Ltd. SMIC alone has monthly output of 160,000 wafers (200mm equivalent), and Hynix will have two 200mm facilities and soon a 300mm site as well.

Fabless houses from Taiwan that source production in China, including Himax Technology Inc. and Novatek Microelectronics Co. Ltd., also are seen as a revenue source for Taiwan assembly firms moving business to the mainland.