Identifier
Created
Classification
Origin
07TAIPEI1098
2007-05-16 06:59:00
CONFIDENTIAL
American Institute Taiwan, Taipei
Cable title:  

TAIWAN ENTREPRENEUR CRITIQUES CROSS-STRAIT TIES,

Tags:  PGOV PREL ETRD ECON TW 
pdf how-to read a cable
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TO RUEHC/SECSTATE WASHDC IMMEDIATE 5268
INFO RUEHBJ/AMEMBASSY BEIJING 6777
RUEHUL/AMEMBASSY SEOUL 8641
RUEHKO/AMEMBASSY TOKYO 8764
RUEHWL/AMEMBASSY WELLINGTON 1776
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RUEHGZ/AMCONSUL GUANGZHOU 0249
RUEHHK/AMCONSUL HONG KONG 8021
RUEHGH/AMCONSUL SHANGHAI 1074
RUEHSH/AMCONSUL SHENYANG 5854
RHHMUNA/USPACOM HONOLULU HI
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001098 

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/15/2017
TAGS: PGOV PREL ETRD ECON TW
SUBJECT: TAIWAN ENTREPRENEUR CRITIQUES CROSS-STRAIT TIES,
LOCAL POLITICS


Classified By: AIT director Stephen M. Young. Reason(s):
1.4 (B/D)

Summary:
-------

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001098

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/15/2017
TAGS: PGOV PREL ETRD ECON TW
SUBJECT: TAIWAN ENTREPRENEUR CRITIQUES CROSS-STRAIT TIES,
LOCAL POLITICS


Classified By: AIT director Stephen M. Young. Reason(s):
1.4 (B/D)

Summary:
--------------


1. (C) DIR met one-on-one with Powerchip (DRAM) Company
founder and CEO Frank Huang on May 14 to discuss internal
politics and his own situation. Huang shrugged off recent
investigations of him for alleged insider trading, but
admitted the breathless front page publicity has damaged his
reputation. Huang shared his views on the Taiwan political
scene, praising DPP presidential candidate Frank Hsieh as a
pragmatist who can be expected to advance Taiwan business
interests if elected. Huang, who was in Beijing last month
with Lien Chan, claims that China's leaders have written Chen
Shui-bian off and are now looking toward more productive
relations with his successor following May, 2008. Huang also
repeated the view that Taiwan's semiconductor industry will
remain dominant for at least the next 5-10 years, and in
particular cannot be threatened by the PRC given their
systemic weaknesses in this field. End Summary.


2. (C) Huang has recently been under investigation for
possible insider trading with a subsidiary company, Veutron
Corp, back in 2002. He told DIR he was confident after
discussing the case with the prosecutors that no charges will
be filed, but he admitted that all the histrionic and
inaccurate publicity circulating in the Taiwan press has
damaged his reputation in ways that are more difficult to
remedy. (Note: other plugged-in business contacts of our's
like TSMC's CEO Morris Chang have confirmed the view that
Huang will not be indicted over the Veutron affair.) Huang
also opined that the charges against KMT presidential
candidate Ma Ying-jeou will never result in a conviction. It
is one thing for an ambitious prosecutor to press charges,
but another thing altogether for a judge and prosecutor to
decide the political future of Taiwan by convicting a leading
presidential candidate of such flimsy charges.


3. (C) Huang was upbeat about the choices for president,

claiming friendships with both Frank Hsieh (Chang-ting) and
Ma Ying-jeou. His family and Hsieh's family grew up in the
same old Taipei neighborhood and know one another fairly
well. Huang drew a distinction between more cosmopolitan
city-reared Taiwanese like Frank Hsieh, and the less polished
Chen Shui-bian or Su Tseng-cheng, whose roots are southern
and rural. Hsieh will be a pragmatic, pro-business leader if
elected, Huang predicted, based in part upon his record as
Kaohsiung mayor and premier. In this regard, Huang regarded
Hsieh as ultimately the better candidate than Ma, since he
felt Ma would be more constrained by the deeply conservative
old guard in the KMT if elected. For many of these deep Blue
greybeards, the ideal remains return to the good old days
when the KMT controlled everything and had no need to
compromise or share power. Unrealistic as this is, this
vision clouds the outlook for many like Honorary Chairman
Lien Chan, Chairman Wu Po-hsiung and PFP spiritual leader
James Soong, making them fundamentally authoritarian.


4. (C) Frank Huang participated in the late April
cross-strait business forum in Beijing where Lien Chan met
with Hu Jintao. Though he remains puzzled by Lien Chan's
motives in forging these quasi-formal political ties with
Beijing, Huang felt he couldn't refuse the invitation to
participate in the forum. He was critical of the fawning
attitude of many KMT legislators during the session. Huang
claimed, based on his most recent trip to China, that his
contacts in Beijing have written off Chen Shui-bian and are
now busy looking toward next year's change of power on
Taiwan. But they remain somewhat leery of Ma Ying-jeou,
since they see him as divorced from the old KMT which is more
familiar to members of the CCP. Huang had been in Beijing
prior to Frank Hsieh's victory in the DPP primary, but
expected leaders there to be relieved that the most pragmatic
of the DPP candidates had come out on top.


5. (C) When told that China was signaling significant
concern over possible Chen Shui-bian activities during his

TAIPEI 00001098 002 OF 002


last year in office in their contacts with Washington, Huang
laughed and said "they're pulling your leg!" In his
estimation China is now comfortable that they have outlasted
Chen and can expect smoother relations with Taiwan after May,

2008. Huang also predicted the upcoming retirement of TAO
Chairman Chen Yunlin, to be replaced by Executive Vice
Chairman Zheng Lizhong, will bring a more open view of Taiwan
to that organization. Fundamentally, Huang believes from his
contacts with PRC officials that Hu Jintao is considerably
more open-minded regarding Taiwan than Jiang Zemin had been,
and was in no rush to resolve the Taiwan question, so long as
the island doesn't take irrevocable steps toward independence.


6. (C) Huang, like nearly all Taiwan businessmen, would like
to see liberalized cross-strait economic ties, and believes
newly appointed Premier Chang Chun-hsiung may take some steps
in this direction. He was favorably viewed by the business
community during his earlier stint as premier. But the key
remains Chen Shui-bian, who may see this as politically
unwise in his calculations of DPP advantage during the run-up
to legislative and presidential elections. In any event,
Huang expects the next president of Taiwan to be more
pro-active in establishing direct links and easing other
restrictions on the cross-strait relationship.


7. (C) Frank Huang remains bullish on Taiwan's hi-tech
sector, which he predicts will face no real challenge from
China for the next 5-10 years because the mainland lacks the
creativity and flexibility which have made Taiwan such a star
in this area. He related a controversy recently concerning
China's attempts to change Taiwan's nomenclature within the
World Semiconductor Council (WSC),which consists of the
U.S., Japan, South Korea, the EU, China and Taiwan. Huang,
as President of the Taiwan Semiconductor Industry Association
(TSIA),represents Taiwan in the WSC. He reported at their
latest meeting that China was still trying to force a change
in TSIA's name to reflect the current Olympic formula of
Chinese Taipei. Huang attributed much of this politicization
to conservatives in China's MFA, including the past minister
Li Zhaoxing. Huang hoped Yang Jiechi would bring a more
enlightened attitude to such questions, but remained unsure
at this early date what to expect.

Comment:
--------------


8. (C) A U.S. educated medical doctor turned entrepreneur,
Frank Huang gained enhanced international celebrity when he
signed a $14 billion dollar multi-year deal with Japanese
firm Elpidia to build several DRAM fab foundries in Taiwan
last fall. Like many Taiwan businessmen, he seems
comfortable with both sides of the political spectrum here,
and has ties to the mainland, though the bulk of his business
remains centered here. His views -- if somewhat more
outspoken -- reflect fairly mainstream opinion in the Taiwan
business community, though he is less dependent on
cross-strait trade than many tycoons who have moved their
production across the strait to take advantage of low labor
costs.
YOUNG