HONG KONG -- Taiwan is coming to grips with a paradox: China is both its best friend and its worst enemy. In recent weeks, the island has been debating what its priority should be -- to enhance its economy by taking advantage of what China has to offer, or to safeguard its political security by restricting economic involvement with the mainland.
The business community, eager to take advantage of the mainland's cheaper land and labor, has been pressuring the government to lift restrictions on investments across the Taiwan Strait. A case in point is the semiconductor companies in Taiwan. Roughly 30 percent of the island's silicon wafer-making capacity is idle, while China's market for chips is growing from $25 billion this year to an estimated $41 billion by 2005.
That is why the Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. -- the world's two largest contract chipmakers -- lobbied the Taiwan government for permission to move older plants into mainland China. These plants produce 8-inch wafers, using 0.25-micron etching technology. (By contrast, state-of-the-art facilities produce 12-inch chips with 0.13-micron processing technology.)
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