According to the Ministry of Economic Affairs regulations that are already in place, Taiwanese 12-inch wafer manufacturers are only permitted to invest in Mainland China through “equity participation” or “mergers and acquisitions.” Companies are allowed to set up 12-inch wafer factories as co-investors with Mainland Chinese companies or purchase 99% or above of stock in Mainland Chinese companies.

However, TSMC is adamant about setting up factories with “sole proprietorship” in order to ensure that their manufacturing technology and management procedures are not leaked to the outside.

During the course of several negotiations, the Ministry of Economic Affairs has already recognized that “sole proprietorship” will be helpful in guaranteeing that Taiwan will be able to assume the leading position in global chip foundry. Furthermore, the Ministry will together with other government agencies specify new investment regulations.

According to current government procedures in Taiwan, if a new law is passed, it must then be presented to the Executive Yuan for ratification. If the Executive Yuan agrees, TSMC will be eligible to apply as soon as the second half of this year, and the application could be approved as soon as the end of the year.

In regards to this matter, a Ministry of Economic Affairs official commented that “everything is underway.”

TSMC stated that they are still in the process of evaluating their investment plan in Mainland China, and that TSMC will wait until the government policy is formally announced before issuing a statement.

(TR/Phil Sweeney)