Chip delivery calms China Taiwan tensions

A rare chartered cargo flight will deliver manufacturing equipment to China for Taiwan Semiconductor

A delivery of semiconductor chip production equipment is being seen as an opportunity to ease tensions between Taiwan and China.

The rare chartered cargo flight, planned for this week, will deliver manufacturing equipment to China for Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chip maker. 

The flight is also notable because Taiwan has placed tough restrictions on the export of technology to China.

However, the 0.25-micron process 8in wafer production equipment being moved from a TSMC plant in Taiwan to the company's chip foundry in Shanghai is far from cutting edge.

Sources in Taiwan have suggested that it is being shifted overseas to make way for more advanced equipment.

TSMC, which manufactures most of its chips in Taiwan, reported almost $5bn in sales during the first six months of this year, an increase of more than 38 per cent over the same period in 2005.

The cargo will be carried by Taiwan's national flag carrier, China Airlines, which, despite its name, does not normally fly to mainland China.

The airline has close links with Taiwan's opposition nationalist party, which favours stronger ties with China than the island's government.

Taiwan is the most important source of inbound investment and technological expertise for China, while China provides low-cost manufacturing services that are vital for Taiwanese companies.

However, political relations between the two sides are hostile. China sees Taiwan, a large island 90 miles off its east coast, as a renegade province despite its de facto independence.

Direct air links will help Taiwanese companies cut costs by reducing transport time and avoiding unnecessary wear and tear, the China Economic News Service reported, citing comments from unnamed executives at Taiwanese high-tech companies operating in China. 

Cargo shipments from Taiwan would normally go via Hong Kong or Macao, adding about two hours to the travel time, rather than travelling direct to China.

The special flight is the first under a recently-signed agreement between Taipei and Beijing to allow chartered cargo flights across the narrow stretch of sea that divides them.

However, since each shipment needs to be approved individually by both governments, it is unclear whether such flights will become commonplace.

Apart from a small number of humanitarian charter flights over the past three years, the only other direct flights between Taiwan and China over the past half century have been hijacked planes and air force defectors.