China sup­ply chain plan could pose threat to Tai­wan

The China Post - - LOCAL -

A plan laid out by Chi­nese author­i­ties to cul­ti­vate a do­mes­tic sup­ply chain for the coun­try’s high-tech man­u­fac­tur­ing sec­tor is ex­pected to pose a se­ri­ous threat to Tai­wanese com­pa­nies, gov­ern­ment sources said Satur­day.

In voic­ing the con­cerns, Min­istry of Eco­nomic Af­fairs sources said China’s ef­forts to help its own high-tech sup­ply chain flour­ish to lower de­pen­dence on im­ported parts have al­ready re­duced China’s trade de­pen­dence on Tai­wan.

The plan un­veiled by Bei­jing in May to cre­ate a man­u­fac­tur­ing revo­lu­tion un­der­pinned by smart tech­nolo­gies over the next 10 years could deal a fur­ther blow to Tai­wan’s ex­ports, they said.

The latest plan for the main­land to grow its own high-tech sec­tor, called “Made In China 2015,” takes aim at var­i­ous sec­tors, in­clud­ing the in­for­ma­tion tech­nol­ogy, and puts a heavy em­pha­sis on the semi­con­duc­tor seg­ment.

Ac­cord­ing to fig­ures com­piled by the Bureau of For­eign Trade (BOFT), the ra­tio of China’s im­ports from Tai­wan to to­tal im­ports fell to 7.76 per­cent in 2014, from 11.3 per­cent in 2005.

South Korea, a strong ri­val of Tai­wan in the China’s mar­ket, has faced a sim­i­lar trend though the de­cline has been less pre­cip­i­tous. South Korea’s share of China’s im­ports fell from 11.64 per­cent in 2005 to 9.69 per­cent in 2014, ac­cord­ing to the fig­ures.

In 2000, semi-fin­ished prod­ucts made up al­most 60 per­cent of China’s to­tal im­ports, but the ra­tio fell to about 20 per­cent dur­ing the 2012-2014 pe­riod, the BOFT sta­tis­tics showed, in­di­cat­ing that China’s ef­forts to up­grade its in­dus­trial sup­ply have paid off.

The MOEA sources told CNA that the so- called “red sup­ply chain,” re­fer­ring to the fast­grow­ing clus­ter of high-tech com­po­nents cul­ti­vated by the Chi­nese gov­ern­ment, could send more rip­ples through Tai­wan’s high­tech sec­tor.

The Made-In-China 2015 plan has set its sights on mas­ter­ing crit­i­cal tech­nolo­gies in the in­te­grated cir­cuit sec­tor, rang­ing from IC de­sign, wafer foundry oper­a­tions, and IC pack­ag­ing and test­ing ser­vices, all ar­eas in which Tai­wan ex­cels.

It would build on ma­jor strides al­ready made by China in up­grad­ing its semi­con­duc­tor sec­tor. In 2009, China-based HiSil­i­con Tech­nolo­gies Co. was the only Chi­nese IC de­signer to rank in the top 50 in the world, but there were nine Chi­nese com­pa­nies in the top 50 in 2014.

While Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing Co. ( ) Chair­man Mor­ris Chang ( ) still has faith in Tai­wan’s semi­con­duc­tor sec­tor, say­ing the gap be­tween Tai­wan and China is widen­ing in­stead of nar­row­ing, Charles Kau ( ), pres­i­dent of DRAM maker Nanya Tech­nol­ogy Corp. (

), said that China’s high-tech de­vel­op­ment ini­tia­tives “will se­ri­ously af­fect Tai­wan’s IC in­dus­try.”

Paul Wang ( ), chair­man of In­ter­net com­mu­ni­ca­tions de­vice sup­plier Ser­comm Corp. (

) Chair­man, said the gov­ern­ment should fol­low in China’s foot­steps and set up a NT$100 bil­lion (US$3.23 bil­lion) fund to sup­port the lo­cal semi­con­duc­tor in­dus­try.

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