Red Chinese fabs close to completion

WE FIRST VISITED THE HSINCHU science park 12 years ago and were very impressed by what the guys were doing in the way of semiconductor fabrication down there.

Now it appears that SMIC (Semiconductor Manufacturing International Corp) is ready to start operations in Red China, something that could not be contemplated 12 years back when Taiwan was still under Kuomintang martial law.

But it appears from reading the story carefully that funding for SMIC comes from Taiwanese majors which could be in breach of the island's regulations forbidding investment in strategic industries.

According to Reuters, SMIC has had funding from Taiwanese firms, while a second fab is being built in a joint venture between Formosa Plastic heir Winston Wong and the son of Jiang Zemin, ruler of Red China. This latter fab is under construction, the report says.

And Taiwanese firms are likely to be the first customers of SMIC, begging questions about what happens to the island's own fab foundries.

Perhaps more importantly, the development of high tech fabs on the Chinese mainland should serve as a warning to the United States that Jiang Zemin officials have vowed they will have the technological world leadership in a matter of decades.

While the US appears to view Red China as a lucrative business opportunity, the balance of trade between the countries is mostly one way, as reported earlier this year. Relationships between China and the US have been partially restored after the "spy plane" incident which happened in George Bush II's early days.

Given these recent developments in fab technology, we wonder how long the US "Silicon Shield" will protect "renegade province" Taiwan. µ