Taiwan is tightening its control over semiconductor and LCD-panel technology transfer to China, seeking to examine investments, mergers and acquisitions involving Chinese individuals or companies before contracts are signed.
The Investment Commission of the Ministry of Economic Affairs (MOEA) said it is drafting an amendment on two items in the "Licensing Regulations on Permission of Engaging Investments and Technology Cooperation," and the lawmaking procedures are expected to be completed in January 2022.
"Investments made by semiconductor (including foundry, packing/testing, and IC design) and LCD panel industries which currently only need approval by the government's Key Technology Committee for investment in mainland China will be subject to the new requirements," an Investment Commission spokesperson told DIGITIMES.
However, there is a US$50 million compliance threshold for IC packaging, testing and IC design companies. Those with capitalization under the threshold will not be required to do so.
Currently most of the Taiwanese companies engaging M&A deals and investments with their China counterparts are only required to file data in the Investment Commission system within two months of the deals' completion. When the proposed amendment is implemented, the transfer of equity will be changed from an ex-post facto filing system to an ex-ante application system. Transfer of equity to Chinese legal entities or people in the semiconductor and panel industries will be treated as "technical cooperation" which will require the approval from the Key Technology Committee.
Since the end of last year, the said regulations for permitting investment or technical cooperation in China have already been amended to add the requirement of government approval for direct or indirect technology "transfer" from a third place. Originally, only "licensing" of specialized technologies was required to apply for permission.
"The IC packaging company ASE Technology Holding's deal selling four IC packaging factories to Beijing Wise Road Asset Management announced in early December are not required to follow the new regulations, because the deal was already done before the amendment, and they are selling mature technologies for proceeds to invest in advanced technologies in Taiwan," said the Investment Commission spokesperson.