MOEA MAY LOOSEN TECHNOLOGY TRANSFER RULES

C O N F I D E N T I A L TAIPEI 000539

SIPDIS

DEPT FOR EAP/TC, NP/ECNP
DEPT PLEASE PASS AIT/W

E.O. 12958: DECL: 02/03/2105
TAGS: ETTC ECON ETRD TW CH
SUBJECT: MOEA MAY LOOSEN TECHNOLOGY TRANSFER RULES

REF: A. STATE 15626

B. TAIPEI 343

Classified By: AIT Director Douglas H. Paal, Reason 1.5 b/d


1. (C) In a February 2 meeting with AIT/T econoff, Taiwan
Ministry of Economic Affairs (MOEA) Executive Secretary Huang
Chin-tan and his deputy Emile Chang gave an update on
Taiwan's investment control regulations for semiconductor
manufacturing investment in the PRC. Huang said that based
in part on the non-paper provided in ref A, his office had
drafted a report on the issue for MOEA Minister Ho Mei-yueh
seeking a decision on whether to change Taiwan's regulations,
which currently allow investment in the PRC utilizing
manufacturing technology that produces a minimum feature size
of 0.25 microns. Because of recent changes in Taiwan's
cabinet, the MOEA Vice Minister had decided not to pass the
report forward until it became clear whether a new MOEA
Minister would be appointed. Huang expects that the
memorandum will move forward to the Minister soon and that a
decision will be forthcoming shortly. (Note: Huang does not
believe that a new Minister will be appointed at this time.
End note.) He underscored that the Taiwan government wants
its regulations to be consistent with U.S. export controls
and the Wassenaar Agreement. Huang also noted that the
investments proposed by Powerchip and ProMOS in their
December applications to MOEA (reported ref B) would probably
only be realized if the minimum feature size is reduced to at
least 0.18 microns. He speculated that the DRAM
manufacturing investments would not be economically feasible
with 0.25-micron technology.


2. (C) On a separate subject, Chang asked about U.S.
government concerns about the Lenovo purchase of IBM's PC
unit. Econoff informed Chang that AIT/T did not have any
special knowledge of the Committee of Foreign Investment in
the United States review of the Lenovo/IBM deal, but it
appeared that concern focused on one research unit in North
Carolina. Chang said that Taiwan's response to the deal
would largely depend on whether it received U.S. approval.
If the U.S. approves the deal, that provides Taiwan some
justification for approving the Lenovo purchase of IBM assets
in Taiwan. Huang indicated that there is no significant PRC
investment in Taiwan at this time, but it can be approved on
a case-by-case basis. The Lenovo/IBM deal could be an
important test case. Huang said that only one IBM unit in
Taiwan would be affected by the deal. The unit is
responsible for PC sales and purchasing PC components in
Taiwan. It has about 30 employees and no manufacturing or
R&D function.
PAAL