Taiwan May Loosen Restrictions on China Chip Investments

Taiwan is considering loosening its restrictions on Taiwanese semiconductor investment in China, a move that would continue to boost expanded economic ties with the mainland.

Taiwanese president Ma Ying-jeou said Friday that the island was “not excluding the possibility” of allowing companies to set up 12-inch wafer fabrication plants in China. A wafer is used to make computer chips.

Taiwan currently only allows eight-inch wafer fabrication plants in China — a policy maintained by Ma’s predecessor Chen Shui-bian, who did not allow the transfer of more advanced technology to China.

Ma, who took office 11 months ago amid promises to turn the corner on his predecessor’s anti-China stand, has been trying to improve trade ties with the mainland to boost Taiwan’s economy. The two split amid civil war in 1949, but Beijing continues to claim the self-ruled island as part of its territory.

The president told visiting Santa Clara-based Applied Materials Chairman Michael Splinter that the government was studying the feasibility of the plan.

Taiwan’s main financial daily Economic Daily News quoted unidentified sources on Saturday as saying that the government plans to announce in July the decision to allow 12-inch wafer fabrication plants in China.

The island is a global leader in the semiconductor industry, and it owns the world’s largest contract chip maker, Taiwan Semiconductor Manufacturing Co.

6/6/2009 8:36 AM TAIPEI, Taiwan (AP)