Taiwan Dangles $335 Million to Woo Foreign Chipmakers

(Bloomberg) -- Taiwan's cabinet plans to allocate more than NT$10 billion ($335 million) to entice foreign chipmakers to set up R&D facilities locally, people familiar with the plan said, escalating global competition for much-sought-after semiconductor technology.

The seven-year blueprint to be unveiled Thursday aims to subsidize as much as half of all the research and development costs incurred by global chip companies that build centers on the island, said the people who asked not to be identified because the plan isn't public yet. The program would also apply to local chip firms that convince foreign suppliers to establish such operations in Taiwan. The government is hoping to secure new investments from at least one company each year, according to the people, who added that certain requirements such as on the amount invested and the number of jobs created would apply.

The new policy emerges at a time Taiwan has been caught in the middle of a clash between the U.S. and China over the development of chip technology that powers everything from smartphones to 5G base stations. Last month, the Trump administration barred any chipmaker using American equipment from supplying China's Huawei Technologies Co. without approval, dealing a major blow to Taiwan Semiconductor Manufacturing Co. and the island's other chipmakers. The incentives are designed to attract capital and talent to maintain the island's industry lead, the people said.

Taiwan cabinet spokesman Ting Yi-ming confirmed the government has made plans to attract investments and create jobs, but details need to be finalized.

Taiwan President Tsai Ing-wen has pledged to transform Taiwan into an R&D hub for emerging technologies. Her government is now pursuing more foreign tech investments from multinationals seeking to shift out of China over concerns about the intensifying U.S.-China trade war and their desire to reduce dependency on the world's second largest economy.

The incentive program is mainly targeted at makers of memory chips, the people said, though part of it will also be used to attract global 5G and artificial intelligence technology companies, they added. Another target is power semiconductor companies, one person said. Such makers often focus on non-silicon material, at a time when chip companies are keenly researching new options beyond silicon.