Taiwan liberalises LCD, chip investments in China

In another sign of improvement in the ties between the island nation and the mainland, Taiwan yesterday announced that it will lift the curbs on high-tech investments in China by Taiwanese companies.

The new government guidelines are aimed at easing the restrictions on makers of liquid crystal display (LCD) panels and semiconductors, allowing then to make investments in advanced factories in China. Other Asian rivals Japan and Korea have already relaxed their rules to facilitate higher investment by their companies in the Chinese mainland.

A formal announcement is expected before the start of the Chinese New Year, which is on 13 February.

LCD panel manufactures including the world's third-largest AU Optronics, Chi Mei Optoelectronics, Innolux Display Corporation etc can now build up to three plants, but these units have to be al least one generation behind the technology used in Taiwan.

Taiwan's LCD industry is not enthused by the move, criticizing that the measures are too conservative and inadequate to tap the mainland's opportunities and compete with the rivals.

Through the deregulation, the world's largest contract chipmaker Taiwan Semiconductor Manufacturing Company (TSMC), and United Microelectronic Corporation (UMC) could take stakes in chip factories in China and build advanced production facilities using the 8-inch wafer technology. However, use of the more advanced 12-inch technology is not allowed.