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Letter from the President

Over the past 3 years, the US-Taiwan Business Council has produced a weekly summary of semiconductor news from Taiwan, China, and the US. This service has been free-of-charge and broadly distributed.

The Council is currently expanding into a suite of products that will extensively cover the semiconductor industry as it relates to Taiwan, China, and the United States. These products will include two weekly eBulletins, a quarterly analysis report, an annual analysis report, and an ongoing series of events that will include a large meeting in San Jose, California on September 15 and 16, 2003. An executive summary of the first quarter 2002 analysis report is included below.

These services, however, will now be available to members only. If you are a member and wish to receive the full suite of products, please forward us your contact information. For our non-members, I hope you will consider membership in our organization as we continue to provide new solutions and services. Our 27 years of unmatched access and experience in the Taiwan market position us perfectly to empower companies in this rapidly developing and important triangular environment.

Rupert Hammond Chambers
President
US-Taiwan Business Council

Executive Summary
Semiconductor Report - Quarter 1, 2002
April 1, 2002

Few industry-related issues have aroused so much passion in Taiwan as has the right of its chipmakers to invest across the Taiwan Strait. Many felt that if chip firms were allowed to invest in China, then the entire industry would leap to China overnight, exacerbating the loss of jobs and investment capital that Taiwan has already seen during the recent economic downturn. On the other hand, chip companies argued that they needed to set up plants in China in order to maintain their competitive edge by lowering costs, and to take advantage of the mainland’s $10 billion-a-year and growing chip market.

On March 29, after nearly six-months of conflict that included street protests and calls for the removal of high-level politicians, Premier Yu Shyi-kun announced the decision that – in principal – Taiwan chipmakers may invest in China so long as they abide by certain regulations. Although further squabbling could delay efforts to transform the premier’s announcement into law, the government took a major step by simply signaling its unqualified support for such investment, and the announcement will have both short and long term implications for the semiconductor industries in Taiwan, China, and the US, and particularly on sales of semiconductor equipment.

Our first quarterly report, one in an ongoing series on the triangular chip relationship between the U.S., China, and Taiwan, will focus on the China investment issue, but will also touch on other major issues including the solid potential for Taiwan chip foundries to ink more joint venture agreements on 12-inch wafer fabs, new partnerships between Taiwan memory chip makers and foreign firms, and the rise of Taiwan’s IC design sector.

Table of Contents
Letter from the President 1
About the US-Taiwan Business Council 3
Semiconductor Analysis 5
The State of The Chip Industry’s China Plans 5
Joint Venture Prospects For More 12-Inch Wafer Fabrication Plants 8
New Partnerships For Taiwan Memory Chipmakers 9
The Rise of Taiwan’s IC Design Sector 10
Future Challenges 11
Conclusions 12
Taiwan Semiconductor Industry/Government Contact Information 13
Biographies of Taiwan Government Contacts 23
United States Semiconductor Industry/Government Contact Information 33
Biographies of US Government Contacts 41
Suggestions of Sources for Taiwan Semiconductor Industry Information 55
Semiconductor Headlines: First Quarter, 2002 57

This report is available to our members starting May 1, 2002. To purchase a copy of this report (US$50 for non-members), use this order form.

If you have any questions about the report, please contact Judson Payne, the Council's Director of Corporate Affairs. You can also call us at (703) 465-2930, or email us at Council@us-taiwan.org.

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