FPD Firms Permitted to Invest in China With Latest Technology

Taipei, March 8, 2011 (CENS)--Domestic FPD (flat panel display) firms will be able to buy into or acquire mainland Chinese peers, or make direct investment, without being subject to the restriction of employing technology one generation behind Taiwan, decided the Executive Yuan (the Cabinet) yesterday (March 7).

With the green light, Chimei-Innolux may set up an 8.5-generation plant in China, to vie with Korean rivals for the huge market potential.

The liberalization will reinforce the recent liberation by the Cabinet allowing Chinese firms to buy into local FPD ( flat panel display) firms, leading to cooperation among firms on the two sides of Taiwan Strait and the formation of a complete supply chain. The alliance will help mainland Chinese firms upgrade production efficiency on the one hand, while assuring sales channels for Taiwanese firms, on the other.

The despite the removal of the “N-1” requirement, Taiwanese firms must begin mass production with the latest-generation technology in Taiwan and engage in the R&D of next-generation technology, before being permitted to investment in China. “N1” refers to the employment of technology one generation behind that being used by Taiwanese firms.

This is the second major liberalization move by the government for investment by local hi-tech firms in China, following the permission last February for foundries to buy into or acquire Chinese peers, a move apparently designed to facilitate TSMC buying into SMIC and UMC buying into Hejian.