Taiwan Life and Business in Briefs – February 2018

GROUNDBREAKING PROJECT — TSMC Chairman Morris Chang, center, and other dignitaries at ceremonies marking the start of construction of the company’s state-of-the-art 5-nanometer fab in Tainan. Photo: CNA


During an 18-hour overnight session, the Legislative Yuan approved amendments to the highly controversial Labor Standards Act that the government promises will provide greater flexibility for both workers and employers but which labor activists argue will lead to abuse of labor rights. The amendments include changes to the overtime calculation, with overtime now to be based on actual hours worked rather than the previous blocks of time in which 1-4 hours was treated as four hours and 5-8 hours as eight. Under the revised law, overtime cannot exceed 54 hours a month, up from the previous 46 hours, and employees can now choose to take their overtime compensation either as extra pay or compensatory time off as long as employers obtain agreement from labor representatives to implement such a policy.

The mandatory time between shifts has been reduced to eight hours from 11 in industries specifically designated by the Ministry of Labor, which also requires consent of labor representatives, and employees are now able to work for 12 consecutive days instead of six days with a mandatory holiday.

Labor organizers including the May 1 Action Coalition, an alliance of trade unions and labor rights activists, strenuously objected to the amendments in the days preceding the vote, protesting outside the Legislative Yuan and shutting down some railway service. At least four referendum initiatives have been launched in an effort to overturn the amendments.


ACADEMIC POLITICS — Economist Kuan Chung-ming, former head of the government’s National Development Council, was installed as president of National Taiwan University, Taiwan’s most prestigious university, after charges of plagiarism and conflict of interest were rebutted. PHOTO: CNA

Kuan Chung-ming was sworn in on February 2 as president of National Taiwan University (NTU) after allegations were answered that the former minister of the National Development Council (NDC) under the Ma administration had plagiarized a paper written by one of his former students. There had also been charges of possible conflict of interest arising from his role as an outside director for Taiwan Mobile, since the company’s chairman was involved in the search process for the new president.

Kuan, who served as head of the NDC from 2014-2015 and is an economics professor at NTU, Taiwan’s top university, was accused of plagiarizing a student’s paper for a paper he co-authored with National Chi Nan University professor Chen Chien-liang, entitled “An Empirical Study of the Effect of the Economic Cooperation Framework Agreement on Exports” and presented at a conference last May co-hosted by the Academia Sinica Research Center for Humanities and Social Sciences and the NTU Department of Economics.

Similarities between Kuan and Chen’s paper and the student’s master’s thesis do exist, but that is because the student used material from a working paper written by Kuan and Chen, for which the student gave credit to the two professors, Chen was quoted as saying in the local press. A committee convened by NTU at the behest of the Ministry of Education concluded that the plagiarism and conflict of interest charges were both groundless. Kuan’s election was ratified by the NTU board and certified by the Ministry of Education.


Taiwan’s state-owned Mega International Commercial Bank on January 18 informed the media that it had agreed to pay a US$29 million fine to the U.S. Federal Reserve Board for continuing compliance failures at three of its U.S. branches.

Mega had already paid US$180 million in fines in 2016 to the New York State Department of Financial Services for breaches of U.S. anti-money laundering and bank secrecy laws, which prompted the investigation by the Fed. The latest investigation revealed continued lapses at Mega’s New York, Illinois, and California branches. Despite the fines, Mega Financial Holding Co., the bank’s parent, reported net profits of NT$26.62 billion (US$900.5 million) for last year.


Taiwan Semiconductor Manufacturing Co. (TSMC) January 26 broke ground on a NT$500 billion (US$17.18 billion) fab in Tainan which the company said would be the world’s first producer of 5-nanometer chips. The fab, located in the Southern Taiwan Science Park and due to be operational by 2020, will be TSMC’s largest production facility. The massive investment is expected to further the company’s technological lead. TSMC, the world’s largest foundry chipmaker with a 56% global market share, is a major supplier of chips to Apple and other leading technology companies.

“About seven or eight years ago, many global semiconductor companies stopped pushing forward their technologies. As of today, only three companies in the world continue to move forward with advanced technologies: TSMC is one of them,” TSMC Chairman Morris Chang said at the groundbreaking ceremony.

According to Chang, as TSMC has a track record of delivering 15-20% return on invested capital, it could potentially recover the NT$500 billion investment within five years and generate NT$1.5 trillion in revenue. The investment into 5-nanometer technology will include an additional NT$200 billion in R&D, and the company aims to grow revenue at 5-10% annually between now and 2021. The company is already looking ahead to 3-nanometer technology.


Taiwan’s Fair Trade Commission (FTC) announced that U.S. chipmaker Qualcomm will make an initial payment of NT$390 million, the first of 60 installments of a NT$23.4 billion (US$782 million) fine levied by the FTC for violating anti-trust laws. The chipmaker will make monthly payments over the next five years to pay off the fine. The fines stem from Qualcomm’s monopoly on modem technologies, which provide wireless data connectivity for mobile phones and which the chipmaker refuses to license to other industry players. Qualcomm is facing significant setbacks to its business model, and has been fined US$854 million by South Korean regulators in 2016 and US$975 million by Chinese regulators in 2015. It is fighting U.S. regulators and Apple Inc. in U.S. courts over these same issues.

The FTC determined that Qualcomm was actively working to prevent other technology companies from competing in the wireless modem space in Taiwan. The fine is the largest ever imposed by the FTC. On October 25 last year, Qualcomm ceased its partnership on 5G wireless technology with Taiwan’s Industrial Technology Research Institute (ITRI). The company didn’t disclose why it ended the partnership, but ITRI researchers see it as a response to the fine and note that it will set back Taiwan’s development of 5G technology.