US embassy cable - 05TAIPEI539

C O N F I D E N T I A L TAIPEI 000539 
 
SIPDIS 
 
DEPT FOR EAP/TC, NP/ECNP 
DEPT PLEASE PASS AIT/W 
 
E.O. 12958: DECL: 02/03/2105 
TAGS: ETTC, ECON, ETRD, TW, CH, Cross Strait Economics 
SUBJECT: MOEA MAY LOOSEN TECHNOLOGY TRANSFER RULES 
 
REF: A. STATE 15626 
     B. TAIPEI 343 
 
Classified By: AIT Director Douglas H. Paal, Reason 1.5 b/d 
 
1. (C) In a February 2 meeting with AIT/T econoff, Taiwan 
Ministry of Economic Affairs (MOEA) Executive Secretary Huang 
Chin-tan and his deputy Emile Chang gave an update on 
Taiwan's investment control regulations for semiconductor 
manufacturing investment in the PRC.  Huang said that based 
in part on the non-paper provided in ref A, his office had 
drafted a report on the issue for MOEA Minister Ho Mei-yueh 
seeking a decision on whether to change Taiwan's regulations, 
which currently allow investment in the PRC utilizing 
manufacturing technology that produces a minimum feature size 
of 0.25 microns.  Because of recent changes in Taiwan's 
cabinet, the MOEA Vice Minister had decided not to pass the 
report forward until it became clear whether a new MOEA 
Minister would be appointed.  Huang expects that the 
memorandum will move forward to the Minister soon and that a 
decision will be forthcoming shortly.  (Note: Huang does not 
believe that a new Minister will be appointed at this time. 
End note.)   He underscored that the Taiwan government wants 
its regulations to be consistent with U.S. export controls 
and the Wassenaar Agreement.  Huang also noted that the 
investments proposed by Powerchip and ProMOS in their 
December applications to MOEA (reported ref B) would probably 
only be realized if the minimum feature size is reduced to at 
least 0.18 microns.  He speculated that the DRAM 
manufacturing investments would not be economically feasible 
with 0.25-micron technology. 
 
2. (C) On a separate subject, Chang asked about U.S. 
government concerns about the Lenovo purchase of IBM's PC 
unit.  Econoff informed Chang that AIT/T did not have any 
special knowledge of the Committee of Foreign Investment in 
the United States review of the Lenovo/IBM deal, but it 
appeared that concern focused on one research unit in North 
Carolina.  Chang said that Taiwan's response to the deal 
would largely depend on whether it received U.S. approval. 
If the U.S. approves the deal, that provides Taiwan some 
justification for approving the Lenovo purchase of IBM assets 
in Taiwan.  Huang indicated that there is no significant PRC 
investment in Taiwan at this time, but it can be approved on 
a case-by-case basis.  The Lenovo/IBM deal could be an 
important test case.  Huang said that only one IBM unit in 
Taiwan would be affected by the deal.  The unit is 
responsible for PC sales and purchasing PC components in 
Taiwan.  It has about 30 employees and no manufacturing or 
R&D function. 
PAAL