Taiwan eases chip investment in China

Taiwan relaxed restrictions on flat screen and microchip investment in China yesterday as it seeks closer high-tech ties across the Taiwan Strait.

Taiwanese liquid crystal display (LCD) companies can set up assembly plants in mainland China, benefiting from cheap labour. But restrictions exist to avoid giving China a technological advantage.

Under the new rules, Taiwanese LCD makers will be allowed to invest in "fifth-generation" plants in China, according to a statement released by the economic ministry.

They will also be allowed to invest in "sixth-generation" plants on the mainland on condition that they keep more advanced technologies at home, it said.

"In so doing, Taiwan would be able to make sure its LCD makers sustain technology superiority over their Chinese competitors while tapping the mainland's vast market," an economic ministry official told reporters.

Taiwanese microchip makers will also will be allowed to merge or invest in their Chinese peers, while being barred from investing in plants migrating to state-of-the-art 12-inch technologies. Currently, Taiwan companies are allowed only to build eight-inch wafer plants in China.

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