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INTERNATIONAL > East Asia & Pacific

Taiwan tightens screening of tech investment in mainland China

  • August 28, 2020
  • , Nikkei Asian Review , 2:01 a.m.
  • English Press

YU NAKAMURA, Nikkei staff writer

 

TAIPEI — Taiwan will screen proposals of chipmakers and other tech companies seeking to invest in mainland China, taking another step to prevent Beijing’s appropriation of sensitive technology in such areas as chip design.

 

All investment plans involving tech transfers will be reviewed beforehand under the revised regulations, which will take effect in about two months. Companies had previously been permitted to submit filings after making such investments.

 

Restrictions on high technology have changed globally in recent years, a representative from the Ministry of Economic Affairs’ Investment Commission told Nikkei.

 

“We, too, must strengthen regulations and institute effective controls,” the representative said.

 

The specter of Taiwanese technology falling into Beijing’s hands, either through joint ventures or technological tie-ups with mainland enterprises, has emerged as a hot-button issue.

President Tsai Ing-wen’s government has aligned itself with the U.S. in applying further pressure against China. Just last week, Taiwanese officials unfurled tighter rules for screening Chinese investments on the island.

 

Washington has moved to essentially block Chinese telecommunications company Huawei Technologies from procuring chips based on American technology. The new investment controls by Taiwan would amplify the blow delivered by the U.S.

 

The island is home to chipmaking behemoth Taiwan Semiconductor Manufacturing Co. along with MediaTek, Taiwan’s largest chip designer and developer. Numerous small and midsize chip design outfits, founded by veterans of larger companies, populate Taiwan as well.

 

China, which is lacking in native semiconductor technology, has long approached Taiwan with an eye on gaining access to the tech sector. Ma Ying-jeou, the former China-friendly president of Taiwan, responded to Beijing’s lobbying in 2010 by removing chip design from a list of items in which mainland investment was banned.

 

China has aggressively offered tax and other incentives for Taiwanese corporations to invest across the strait. At least 3,000 Taiwanese chip engineers have taken positions in Chinese companies since 2015, the year Beijing launched the “Made in China 2025” initiative for technological self-sufficiency.

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