Taiwanese Chip Assemblers Investing in China

Powertech Technology Inc. and Advanced Semiconductor Engineering Inc. (ASE) have both been granted permission by the Ministry of Economic Affairs (MOEA) to fund investment projects in mainland China. China Economic News (CENS) says:

With the permission, Powertech will invest US$100 million to open a brand-new test and packaging factory in southern or central China to keep up with rising demands from memory-module maker Kingston Technology and other customers in the mainland.

ASE is ratified to put US$90 million into expanding an operating factory in Shanghai to keep it advantageous in the intensifying competition in the mainland`s test and packaging market.

However, in return for receiving permission to invest in the mainland, both Powertech and ASE have pledged to invest significant sums back into Taiwan. CENS says:

Powertech pledges to invest NT$8 billion (US$266 million at US$1:NT$30) over next few years to boost capacity at a factory in northern Taiwan, which was completed early this year, and increase 1,000 jobs. Also, MOEA officials said Powertech planned to inject NT$20 billion (US$666 million) into Taiwan`s operations and create 2,000 jobs in next stage of its investment plan.

For ASE, the commitment as return for government permission is to put a total of US$550 million into Taiwan`s operation and increase high-ranking jobs for Taiwanese talents over next three years.

Both companies seem to be convinced they need to invest in China. Powertech argues many of their companies are located there and to be able to service their needs they need to be closer. Whatever the reason, this investment, in the short term at least, seems to be a win-win for both the Mainland and Taiwan.

I am sure over the next few months we will see more and more Taiwanese chipset makers and assemblers investing in China. Previous legislation prevented them from doing so as there was a fear that the high-tech knowledge of these companies would be used in Chinese military applications against Taiwan. The new president Ma Ying Jeo has said he will provide more flexibility to chipmakers and follow the US government guidelines on what technologies can be manufactured in China.

Article: Two Taiwanese Chip Assemblers Approved to Invest in China