TAIWAN has relaxed curbs on its companies setting up semiconductor manufacturing plants on the Chinese mainland in a bid to enable them to better compete for mainland clients.

    The island’s economics authority said it will allow a maximum of three wholly owned 12-inch wafer foundries to be set up on the mainland by Taiwanese companies, easing previous rules that limited such investments to mostly older technology and to joint ventures.

    Amid political tensions between the neighbors, Taiwan has restricted manufacturing activities of its prized semiconductor sector on the mainland, with an eye to protecting intellectual property and trade secrets.

    But competition from the mainland’s fast-growing, though fledgling chip industry, has put pressure on Taiwanese firms to widen their mainland footprint.

    And foreign companies are also building their presence on the mainland. While Samsung Electronics Co. already has a huge chip plant on the mainland, Intel Corp. and Qualcomm Inc. have announced investments in it.

    As a result, Taiwan Semiconductor Manufacturing Co. (TSMC), and its smaller domestic rivals had urged the island province to relax the curbs.

    The relaxation was detailed in revised regulations posted on the Taiwan authority’s website that took effect Friday. Taiwan already allows 8-inch plants, which tend to use less cutting-edge technology, to operate on the mainland as joint ventures.

    TSMC, the world’s largest contract chipmaker, has said that its clients would prefer to work with the company on the mainland and that it could see itself expanding production on the mainland.

    A TSMC representative said Tuesday the company was still evaluating the potential of setting up a new 12-inch plant on the mainland.(SD-Agencies)