According to Nikkei, Taiwan will soon block its tech companies from selling off subsidiaries or other assets in China. This is the latest move by the Taipei government to prevent the leakage of sensitive technology, including semiconductors, into the mainland.
Taiwan’s Economic Authority said it is amending current regulations to require Taiwanese companies to seek approval if they want to sell or liquidate any assets, factories or subsidiaries of Taiwan. they are on the mainland to their Chinese partners, or other local buyers, as this may involve the transfer of sensitive technology. Current regulations only require Taiwanese companies to notify the authorities of such transactions.
Taiwan is working to prevent leakage of sensitive technology into China
A set of revised regulations, designed to protect Taiwan’s valuable chip technology, will be submitted to the Executive Yuan for further review on December 17, and will take effect soon. especially before the end of this year or January 2022.
Taiwan’s Judiciary Service and Mainland Affairs Council are also drafting new rules to prevent experts from disclosing important trade and technology secrets to “foreign opposition forces” in places such as China, Hong Kong and Macao. According to the draft regulation, any professional whose project has been sponsored by the Taiwanese government will have to seek approval if they want to go to China. Some technology executives argue that the scope of the new regulation is too broad and vague, which could affect the industry’s willingness to collaborate on government-funded research and development programs, as well as as a hindrance to overall technological progress in the future.
The closer scrutiny comes as many Taiwanese tech companies have sold their subsidiaries in China over the past few years. Lite-On, a leading power management solutions provider, sold a 51% stake in its hard drive storage subsidiary in Suzhou city to Tsinghua Unigroup in 2017, and the remaining stake to another company. local investment company in June 2021. Leading metal case supplier for iPhone Catcher Technology also sold the factory to Chinese technology supplier Lens Technology last year. Meanwhile, iPhone assembler Wistron has sold its Kunshan factory to Luxshare, an emerging Chinese contract electronics maker.
ASE Technology Holding, Taiwan’s largest chip testing and packaging service provider, is the latest example. Earlier this month, ASE sold shares in two subsidiaries in China to Wise Road Capital, the Chinese private equity firm that was recently involved in the rescue of chip group Tsinghua Unigroup. Wise Road’s $1.4 billion deal to buy South Korean chip maker Magnachip Semiconductor was blocked by the US government this week due to national security concerns.
Nikkei quoted a Taiwanese government official as saying that there will be a dedicated team tasked with taking a closer look at technology-related transactions around “chip production, packaging, testing chips and panels. “. Tsai’s administration has tightened screening of Chinese investment in Taiwanese companies to protect sensitive technology. In addition, Taiwan also banned personnel supply companies from posting job advertisements for sensitive industries such as semiconductors in China.