China’s Impact on the Semiconductor Industry, High Tech, Page 69
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| Page content: contract chipmaker, bet on recovery by restoring investment plans curtailed only two months previously and expanding its R&D team. TSMC is playing a growing role in the global chip industry as IDMs are increasingly outsourcing production, largely because of poor market conditions and the rising cost and complexity of making advanced chips. For instance, in March 2009, Intel turned to TSMC for help in making its microprocessors, the first time the US company has outsourced production. Two months later, Fujitsu Microelectronics announced that TSMC would make some of its chips. China's growing impact on Taiwan's semiconductor industry can also be seen from moves by the island's largest IC design house, MediaTek Inc., to use the mainland as a stepping stone to become a global chip powerhouse. Mediatek, one of the few semiconductor companies to have thrived in the downturn, has grown rapidly in recent years on the back of China's expanding mobile phone market. It is the biggest supplier of chips used in low-priced mobile phones in China, and is aiming to challenge bigger US rivals Broadcom and Qualcomm by supplying chips to global handset makers such as Nokia. Impressed by MediaTek's prowess in China, Microsoft has teamed up with the company to develop smartphone chipsets for the emerging Chinese 3G market. Taiwan opens door to Chinese investment In another sign of the further strengthening of economic ties across the Taiwan Strait, in July 2009, the Taiwanese government lifted a long-standing ban on direct Chinese investment in the island's companies. Even so, the semiconductor industry remains off limits, for the time being at least. The new rules will allow Chinese companies and investors to invest in 64 sectors of Taiwan's manufacturing industry, 25 sectors of the service industry and in 11 infrastructure projects. The liberalized investment rules significantly open up opportunities for Chinese firms, but they still give the Taiwanese government tight control over the approval process. For this reason, it may be some time before substantial mainland investments take form. Taiwan will also continue to exclude Chinese investment in utility industries and business sectors that play a key role in domestic economic development, financial stability or national security. These include the semiconductor, flat panel display, solar panel making and telecommunications sectors. Government officials said these sectors may come up for consideration during an eventual second round of liberalization, but there is no timeframe on further opening up of Taiwan's industries to Chinese investment. For that reason, China-based electronics makers eager to obtain advanced technologies are likely to initially focus on sourcing Taiwan-made products to establish relations with Taiwanese manufacturers, thereby paving the way for investment opportunities in the future. PricewaterhouseCoopers 69 | ||||||
