For Taiwanese memory chip maker Nanya Technology, China's ambition to build up a competitive semiconductor sector is a threat to the balance of the industry, but it will take three to five years to affect the business, according to the company's president.

"Currently, the industry's key players are in control of their output expansion and we don't see any incentive at the moment for them to license technology to new players in China," said Lee Pei-ing, president of Nanya Tech, in an interview on July 27, adding that it would take at least three to five years for Chinese challengers to catch up to the major players or cause oversupply issues in the industry.

Nanya Tech is the world's fourth-biggest producer of dynamic random access memory chips by revenue, trailing Samsung Electronics and SK Hynix of South Korea, and U.S. manufacturer Micron Technology.

DRAM and NAND flash chips are used in a wide range of electronic devices, including personal computers and smartphones. Strategic thinkers see them as key to national security.

That helps explain why China is pouring funds from the central and local governments into big chip-development projects around the country. Among the $66 billion worth of construction projects are state-backed Tsinghua Unigroup's two advanced memory chip parks in the cities of Wuhan and Nanjing, a DRAM plant being built by Hefei Chang Xin Network Technology and a joint DRAM project by Fujian Jin Hua Integrated Circuit and Taiwan's United Microelectronics Corp.

These efforts are pulling in high-profile industry executives such as David Wang, former vice president of Applied Materials; Charles Kau, former president of Nanya Tech; and former UMC head Sun Shih-wei. Hundreds of engineers from Taiwan and South Korea have also been lured to the new Chinese chip players by fatter paychecks, according to industry sources.

Lee said Chinese companies are poaching talent from his company with "very high salaries." Nanya Tech has recently invested "millions of U.S. dollars" to enhance its information security systems to avoid technology leaks, and has also given substantial pay raises to 500 high-value employees to counter China's aggressive moves.

"What we are really concerned about is the unlawful leak of sensitive technology blueprints to competitors, not only the outflow of people," said Lee.

By: DocMemory
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