Ending chipmaker rebates to help Taiwan

The US-Taiwan Business Council said Taiwan's semiconductor industry will benefit from China's agreement with the US to eliminate preferential tax rebates on domestic semiconductor production. China had been rebating 17% value-added tax for locally made chip products, which the US contended broke WTO rules. The scheme ends next April, eliminating a key reason for foreign companies to locate semiconductor manufacturing in the mainland instead of on Taiwan, which claims better industry infrastructure, strong IPR protection and integrated supply-chain, the council said. Taiwan's semiconductor industry earned over US$24 billion in revenue in 2003, approximately US$14 billion of which was attributed to chipmaking.