Identifier
Created
Classification
Origin
09AITTAIPEI405
2009-04-06 08:11:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
American Institute Taiwan, Taipei
Cable title:  

EXBS: TAIWAN MONTHLY REPORTING CABLE - MARCH 2009

Tags:  ETTC MNUC PARM PREL KSTC KNNP TW 
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VZCZCXYZ0001
PP RUEHWEB

DE RUEHIN #0405/01 0960811
ZNR UUUUU ZZH
P 060811Z APR 09
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 1305
RHMFIUU/USCBP WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
UNCLAS AIT TAIPEI 000405 

SENSITIVE
SIPDIS

STATE FOR ISN/ECC - YWONG, ACHURCH, NJOHANSON, AND ROWEN
STATE FOR EAP/TC - MTOYRYLA, DPARKER
STATE FOR ISN/MTR - PDURHAM, SBOYER, JMAYES, AND RPALMIERO
DHS/CBP/INA FOR MAWATT
DOE/NNSA/INECP FOR TPERRY AND SJONES

E.O. 12958: N/A
TAGS: ETTC MNUC PARM PREL KSTC KNNP TW
SUBJECT: EXBS: TAIWAN MONTHLY REPORTING CABLE - MARCH 2009

REF: Taipei 381 and previous (notal)


I. BROAD ITEMS OF INTEREST TO ADVISORS AND AGENCY MANAGERS:
UNCLAS AIT TAIPEI 000405

SENSITIVE
SIPDIS

STATE FOR ISN/ECC - YWONG, ACHURCH, NJOHANSON, AND ROWEN
STATE FOR EAP/TC - MTOYRYLA, DPARKER
STATE FOR ISN/MTR - PDURHAM, SBOYER, JMAYES, AND RPALMIERO
DHS/CBP/INA FOR MAWATT
DOE/NNSA/INECP FOR TPERRY AND SJONES

E.O. 12958: N/A
TAGS: ETTC MNUC PARM PREL KSTC KNNP TW
SUBJECT: EXBS: TAIWAN MONTHLY REPORTING CABLE - MARCH 2009

REF: Taipei 381 and previous (notal)


I. BROAD ITEMS OF INTEREST TO ADVISORS AND AGENCY MANAGERS:

1. (U) On March 2, the Advisor attended the Taipei International
Machine Tool Show. This year's show was most notable for sparse
attendance by potential buyers as compared with last year.
(U) According to statistics released by the Taiwan Machine Tool
Foundation (TMTF),Taiwan exported US$3.721 billion of machine tools
in 2008, a 5.9% increase from 2007. Exports of metal-cutting
machine tools came to US$2.964 billion in 2008, up 7.4% from 2007;
metal-forming machine tools amounted to US$756.57 million, up a mere
0.5% from 2007.

With respect to export destinations, the combined China and Hong
Kong market ranked first by absorbing US$1.114 billion worth of
Taiwan-made machine tools in 2008, down 14.2% from 2007, and
accounting for 30% of total exports. The U.S. ranked second with
US$338.6 million, down 0.9% from 2007, and accounting for 9.1% of
total exports. Germany ranked third with US$224.09 million, up a
whopping 45.2% and accounting for 6% of total exports.

The TMTF's data also show that Taiwan imported US$1.535 billion of
machine tools in 2008, down 39.9%. Japan was Taiwan's largest
import supplier by selling US$931.4 million of machine tools in
2008, down 20% from 2007, and accounting for 60.6% of total imports.
The U.S. stood at second place with US$299.73 million, down 69.8%
from 2007 and accounting for 19.5%. The third place went to Germany
with US$101.97 million, up a whopping 43.5% and commanding 6.6% of
total imports.

According to a press release by TMTF, the demand for imported
machines is driven by domestic precision parts and metal products
sectors, with demand for imported machines by high-tech industries
such as semiconductors, information technology, electronics,
communications and optoelectronics on the wane. TMTF chief
executive C.C. Wang said the domestic machine-tool industry has seen

nose-diving exports since the beginning of the fourth quarter of

2008.

2. (U) On April 1, the Taiwan Memory Co (TMC),a joint state-private
funded dynamic random access memory (DRAM) firm, announced that it
has chosen Japan's Elpida Memory Inc. as its strategic partner to
jointly develop and make new memory chips for mobile devices based
on Elpida's technologies (reftel). Through the venture, TMC aims to
jointly develop its own technological capabilities for designing
chips and to selling products and chips under its own or Elpida's
brand name.

(U) During the announcement, John Hsuan, head of TMC said "Elpida
has shown strong intent to have detailed discussions with TMC about
technological cooperation. The companies will enjoy a deep
cooperation."

(U) To diversify from the existing computer memory chip market, TMC
would focus on developing innovative DRAM chips, especially mobile
DRAM, as well as outsourcing production to local DRAM companies
using TMC's technologies.

(U) TMC is continuing its discussions on a potential technological
partnership with U.S. chipmaker Micron Technologies Inc. The press
report stated that Micron has not made a final decision as it first
needs obtain approval from its Taiwan partner, Nanya Technology
Corp.

(U) TMC plans to recruit 800 people after it is established next
month.
(SBU) The EXBS Advisor plans to meet with a representative of the
Japan Interchange Association in the next week or two to discuss
export control implications of the partnership. Taiwan's Strategic
High-Tech Commodity List includes technology, but the regulations
refer only to commodities. This discrepancy in Taiwan's control of
technology transfer has been an ongoing issue between the U.S. and
Taiwan. With the DRAM partnership announcement, this may be the
opportune time for Taiwan to take action to close this regulatory
loop.
[Note: The Advisor has been sending regular updates via email on TMC
formation to ISN/CATR, ISN/ECC, and DOC/BIS.]
II. COMPLETED ACTIONS FOR THE REPORTING PERIOD

A. SITE ASSESSMENTS AND MEETINGS DURING REPORTING PERIOD:


1. (SBU) On March 5, the Advisor met with Professor Liu Fu-Kuo of
National Chengchi University. Professor Liu is a Taiwan
representative to the Export Control Experts Group (XCXG) of the
Council for Security Cooperation in the Asia Pacific (CSCAP),a
non-governmental (second track) process for dialogue on security
issues in the Asia Pacific. According to Professor Liu, Taiwan has
been involved in XCXG since 1998 as "other participant" after
several rounds of negotiations with China. Taiwan participates
through invitations by the U.S. Because Taiwan is not a member of
CSCAP, it does not participate in the General Conference or Steering
Committee, both of which are CSCAP decision-making bodies.

(SBU) Professor Liu stated that Taiwan's representatives to XCXG are
vetted by China, and China has the final say on who can represent
Taiwan at these meetings. Because of this, it has been very
difficult for Taiwan to develop its own cadre of experts in the
nonproliferation field.

(SBU) While a small step, as a start to Taiwan developing
nonproliferation experts, the Advisor offered to speak to a group of
graduate students at Chengchi University on the work of EXBS and,
nonproliferation generally, in the near future.


2. (SBU) On March 20, along with Mr. Kuo Lin-wu, former Director of
the Office of Homeland Security, Executive Yuan, the Advisor met
with Mr. Chunto Tso, a Director of the Taiwan Institute of Economic
Research (TIER). TIER is a semi-private research organization that
receives support from the Taiwan Ministry of Economic Affairs. TIER
provides research and policy guidance on Taiwan's membership in
APEC. The meeting was to get informal feedback and interest by
existing non- or quasi-governmental organizations on the feasibility
of establishing a Taiwan NGO to work on nonproliferation issues much
like the Center for Information on Security Trade Controls (CISTEC)
of Japan, and the Korea Strategic Trade Institute (KOSTI) of Korea.


(SBU) Based on conversations with various officials over the last
year, Taiwan is open to and is taking steps, albeit "baby" steps, to
establish a CISTEC-type NGO. While certain offices have the funds
to do research and outreach work, they do not have the personnel to
actually do the work. Further, Taiwan is looking to decrease
personnel as part of its official restructuring, not to increase
personnel. Therefore, establishing an NGO may be a way to advance
nonproliferation work without increasing official personnel.


B. BLUE LANTERN:

None.

III. TRAINING CONDUCTED DURING REPORTING PERIOD:


1. (U) On March 11-13, ICP train-the-trainer workshop was held in
Taipei. Ten Taiwan officials were trained during the workshop.
These officials will be the trainers for the ICP deployments.


2. (U) On March 31, the Industry-Government Relations Forum: ICP
kick-off was held in Taipei. Over 140 Taiwan company
representatives attend the Forum. Madam Chun-Fang Hsu, Deputy
Director General of the Bureau of Foreign Trade, and Robert S. Wang,
Deputy Director of AIT, opened the Forum for Taiwan and the U.S.,
respectively.

IV. UPCOMING TRAINING:

1. (U) Internal Control Program software deployment is scheduled
for the following dates:

Deployment 1 (Hsinchu) - April 16-17, 2009;
Deployment 2 (Kaoshiung) - May 14-15;
Deployment 3 (Taichung) - May 18-19; and
Deployment 4 (Tainan) - June or July (TBC).


2. (U) From April 6 - 10, 2009, Incident Command Systems Training,
implemented by Customs and Border Protection, is scheduled to take
place in Taipei. (This program replaces the originally-scheduled
Hazardous Materials Response Training.)


3. (U) From April 27 - May 1, 2009, Radiological Detection Training,
implemented by the Department of Energy, is scheduled to take place
in the State of Washington.


4. (U) A Commodity Identification Training, implemented by the
Department of Energy, is notionally scheduled for June.


5. (U) A WMD Investigation Training, implemented by Immigration and
Customs Enforcement, is notionally scheduled for the second half of
July. The training was originally scheduled for the week of
February 23.


V. RED FLAG ISSUES:
None.

POC for this report is Mi-Yong Kim, EXBS Advisor. Telephone 886 2
2162 2347.

YOUNG