CEO of chip maker SMIC giving up Taiwan citizenship

Richard Chang's alleged investment in China's SMIC riled the Taiwan government

The head of China's largest chip maker has applied to give up his Taiwanese citizenship after a spat with the government, an official from the company said Tuesday. The move highlights the troubles chip industry workers from the island face when doing business in China.

Semiconductor Manufacturing International Corp. (SMIC) Chief Executive Officer Richard Chang is a dual citizen of the U.S. and Taiwan, where he worked for years before founding SMIC in Shanghai. But his alleged investment in SMIC riled the Taiwan government, which has strict rules governing how and when its companies and citizens may invest in China's semiconductor industry.

"The Taiwan government is trying to fine our CEO NT$5 million (US$156,000) for alleged improper investment in [SMIC]," said Jimmy Lai, a spokesman for SMIC, on why Chang is seeking to give up his citizenship of the island.

The Taiwan government levied the fine in March, saying Chang failed to apply to authorities before investing in China's semiconductor industry.

Taiwan carefully controls chip investments to political rival China, fearing it could lead to job losses or that its technology could be used to bolster Chinese military prowess. The two separated in 1949 amid civil war, and Beijing has long threatened the use of force to take the island if it moves toward independence.

Chang was given six months to withdraw his investment in SMIC or face further penalties. His attorney is fighting the case in Taiwan, said Lai.

SMIC has a number of other employees with Taiwanese citizenship, but Lai said that to his knowledge, Taipei hasn't gone after any of them.

"The Taiwan government seems to be very selective in who they go after," he said.

In April, Taipei fined United Microelectronics Corp. (UMC) Chairman Robert Tsao NT$3 million for allegedly failing to tell investors about the work of some UMC executives in advising a Chinese chip maker.

UMC and Tsao have denied any wrongdoing in the affair, but Taiwanese prosecutors continue to collect evidence in an ongoing investigation.

Copyright © 2005 IDG Communications, Inc.

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