Sons of Chinese president, Taiwan tycoon join forces

Sons of Chinese president, Taiwan tycoon join forces

TAIPEI/SHANGHAI (Reuters): Sons of Chinese President Jiang
Zemin and Taiwan plastics tycoon Wang Yung-ching will build a
landmark US$1.6 billion chip fabrication plant in China -- a
venture sure to test political limits in Taipei.

Jiang Mianheng and Winston Wang will jointly set up a foundry
in Shanghai with a monthly production capacity of 35,000 eight-
inch wafers, Tim Chuang, spokesman for Wang's plastics and
electronics firm Grace T.H.W. Group, told Reuters on Thursday.

Mass production is scheduled to begin in 2002 in what would be
one of China's biggest chip ventures.

Eight-inch silicon wafers are no longer cutting edge but could
be high tech enough to run afoul of Taiwan's investment curbs.
The industry is moving to 12-inch technology that produce more
chips per wafer.

Taiwan imposes an investment ceiling of $50 million per
project on the mainland, and businesses are banned from investing
in strategic industries such as high-end chipmaking or
infrastructure due to national security considerations.

Wang would not hold an equity stake in the venture in order to
avoid breaking Taiwan laws which bar high tech investment in
China, but he would serve as its president, the spokesman said by
telephone from the southern Chinese city of Guangzhou.

"We respect Taiwan laws," Chuang said. "We will not invest
money in the venture until the Taiwan government approves it."

"Mr. Wang has said he will not hold a stake in the company."

The spokesman said about 30 Taiwan engineers would travel to
and from Shanghai to help set up the plant.

China's State Planning Commission and Ministry of Foreign
Trade and Economic Cooperation were expected to approve the
venture in November, the spokesman said.

The tie-up was unprecedented in nature, and it was unclear if
the Taiwan authorities would block it or how they would try to go
about doing it.

Winston Wang is a son of Wang Yung-ching, chairman of Formosa
Plastics, Taiwan's largest private industrial group.

Jiang Mianheng is vice-president of the Chinese Academy of
Sciences, a top government think tank. He earned a doctorate in
electrical engineering in the United States and is the former
head of Shanghai's information technology office.

The project could trigger an exodus of Taiwan high-tech
companies to China.