Taiwan to allow Chinese investment in chip firms

TAIPEI, TAIWAN: Taiwan will allow Chinese firms to invest in chip makers or set up joint ventures as part of a second round of sectors to be opened up as economic ties between the two political rivals deepen.

Government officials said on Monday that Chinese firms would be allowed to take stakes of up to 10 per cent in Taiwanese chip firms, or to hold up to 50 per cent in joint ventures. They would not be allowed to set up their own operations in Taiwan, however.

The proposal is currently making its way through parliament, but officials could not say when it would be finally approved.

Taiwan chip firms are allowed to buy into mainland ones, but can only use older technologies in any operations there. Semiconductor shares were little moved by the news, with the sub-index .TSII flat by mid-session.

Last month, the government said it would include the LCD panel industry in the second round of opening to Chinese investment, with maximum 10 per cent stakes allowed. It dropped a proposal to allow 20 per cent stakes.

Other sectors to be opened will include metals and machinery, as well as some public infrastructure services. Concerns over loss of intellectual property had kept LCD panels off the first list of 100 sectors opened to investment in 2009.

That list included areas considered less sensitive, including automobiles, plastics and PC manufacturing. That initial opening has brought some $140 million worth of Chinese investment to Taiwan so far.

Taiwan has been pushing for stronger ties with China under the administration of President Ma Ying-jeou since 2008, seeking to bolster the island's economic strength. Political issues, however, remain sensitive.

The two sides signed a landmark trade deal last year that cuts tariffs on thousands of products and brought relations between the two to their best in six decades.

Chinese and Taiwanese officials will discuss the implementation of the trade deal at a meeting starting in Taipei on Monday, while China's top negotiator with the island will visit from Wednesday with a business delegation.

A separate business delegation from the mainland city of Nanjing was in Taiwan last week and signed deals worth some $845 million.