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Taiwan’s chip investment shifts into hyperdrive

Taiwan’s chip investment shifts into hyperdrive

Hi all — James here in Hong Kong. What is your standout quote of the week? This — from an executive struggling to secure a supply of computer chips — has to be mine: “If I am going to be impacted, I must drag my competitors down, too.” Such a dog-eat-dog environment is fuelling an extraordinary chip investment boom in Taiwan that looks set to run and run (The Big Story). Also, check out Hong Kong’s progress in creating a start-up ecosystem (Our take). Don’t miss Anthony Tan’s taste for control at Grab (Smart data). Take care till next week.

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The Big Story

Taiwan’s semiconductor investment boom is moving into hyperdrive. Nanya Technology, the island’s leading memory chipmaker, said it plans to build a $10.7bn chip plant and Foxconn, the world’s largest contract manufacturer, confirmed it was in talks to buy a leading speciality memory chipmaker.

The announcements followed last week’s news that Powerchip Semiconductor Manufacturing Company had begun construction on a $9.9bn chip plant in the Taiwanese city of Miaoli.

Key implications: The investment announcements represented the flipside of the crippling global chip shortage. CC Wei, chief executive of Taiwan Semiconductor Manufacturing Company, warned that the shortage was likely to extend into 2022.

Wu Chia-Chau, Nanya’s chair, said that construction of the plant would start by the end of the year and be completed in 2023.

Nanya is the world’s fourth-largest maker of dynamic random-access memory, or Dram, chips, behind Samsung, SK Hynix and Micron Technology. Dram chips are used in everything from computers and smartphones to servers and connected cars.

Upshot: With the shortage set to persist, a cut-throat environment is emerging. Industry executives are trying to prevent competitors from securing chips by paying top dollar. “If I am going to be impacted, I must drag my competitors down, too,” said one executive.

Mercedes’ top 10

  1. TikTok, the popular Chinese app, is being sued for several billion pounds and accused of illegally collecting children’s data in the UK and Europe.

  2. The UK has ordered an investigation of Nvidia’s $40bn deal to buy Arm, the British chip designer, from Japan’s SoftBank.

  3. New rules requiring companies operating in the US to have permission to use IT equipment and services from China or other “adversary” countries could affect 4.5m businesses.

  4. The FT hit the Shanghai auto show to see how Chinese carmakers are trying to dislodge Tesla’s dominance over the country’s electric vehicle market.

  5. Staying with China’s auto sector, Huawei has accelerated its automated driving push, launching five products last week.

  6. Japan’s space agency was one of the targets of a series of cyber attacks that were apparently linked to China’s military.

  7. This is a worthwhile explainer on how the global chip shortage got so bad, directly from the coal face — Nikkei Asia’s Taiwan-based reporters.

  8. The US is concerned that China is able to grapple its satellites with a robotic arm.

  9. TikTok’s India ban shows that playing by the book is no guarantee of success for foreign tech companies operating in a market with powerful nationalist forces.

  10. An excellent piece here on AI and the lack of metacognition — the capacity to doubt our own thinking. Something to think about as machines are increasingly embedded in our daily lives.

A Nio concept car at the Shanghai auto show © AP

When sages speak

  • This trenchant report by Agatha Kratz and Janka Oertel for the European Council on Foreign Relations and the Rhodium Group is not solely concerned with tech, but it brings several tech sectors into the mix. The overall message is that China’s protected home market provides unfair advantages that threaten European power.

  • Sameer Patil at Gateway House, a Mumbai-based think-tank, offers this insight into how India’s start-up ecosystem is moving into the domain of defence.

Our take

The US listing of Singapore-based Grab, south-east Asia’s most valuable start-up, has occupied the limelight. The fact that Grab was valued at about $40bn has also drawn attention to Singapore’s role as a regional hub for innovative start-ups.

But what about Hong Kong? The efforts of Asia’s world city to nurture a thriving tech start-up scene have long been underwhelming. Things are showing real signs of improvement, however. A clutch of Hong Kong-based unicorns is benefiting from the funding bonanza that has driven a surge in valuations in mainland China.

Among these, Lalamove, a Hong Kong-based online logistics company that operates across Asia, is valued at $10bn after raising funds this year, becoming Hong Kong’s leading unicorn. WeLab, a fintech company,, a blockchain company, and Klook, an online travel group, also rank among the prominent unicorns.

Resilience in the face of the pandemic has also been within the city’s start-up ecosystem. In 2020, the territory had 3,360 start-ups, an increase of 6 per cent from 2019 and 51 per cent since 2017, according to official statistics. A quarter of the founders of those start-ups came from outside Hong Kong and many were drawn by the promise of the mainland China market.

— James


Huawei’s decline has left a void in the smartphone market. And Tony Chen, Oppo’s founder and chief executive, has been only too happy to fill it. Oppo beat its rival to become China’s top smartphone brand in January and has held on to that lead, reclaiming the crown it last held in 2016.

Chen has more than just the mainland market to be happy about. In his 2021 New Year message, he noted that Oppo was the market leader in south-east Asia, enjoyed rising sales in India and has tripled shipments in Europe and Japan.

Oppo’s resurgence mirrored the decline of Huawei, which was forced to cut smartphone output after its chip supply chain was disrupted by US export controls. Huawei sold off its budget phone brand Honor in November.

But Oppo still has fierce competition. Xiaomi, another mainland rival and the world’s third-biggest smartphone seller, has reported soaring sales. But Xiaomi also has a US investment blacklisting cloud hanging over its future. That leaves Chen to make hay while the sun shines.

Art of the deal

China is cracking down on tech companies, and Meituan has been used by analysts as a bellwether for the sector © Bloomberg

Chinese food delivery company Meituan is amassing a $10bn war chest, one of the largest capital raisings by a mainland technology business this year. Meituan said it planned to raise up to $6.6bn from a placement of 187m shares sold at HK$265-HK$274 (US$34-35) each, and raise another $400m through a private placement to Tencent, already one of the group’s largest investors.

But a misfire last week put Meituan on the back foot. The company was forced to put the placement on hold after 300m of its shares (worth some $11bn) were moved into a Hong Kong stock exchange clearing account belonging to Goldman Sachs, according to people familiar with the matter.

The change, which was disclosed publicly and monitored by hedge funds, gave traders an early warning of the upcoming placement of Meituan shares and led to a 7.4 per cent drop in their price last Tuesday. Its Hong Kong-listed shares are yet to recover fully.

But Meituan has bigger problems. Its share price has slumped 37 per cent from a peak this year. China’s government is cracking down on the tech sector and Meituan has been used by analysts as a bellwether for the impact of Beijing’s regulatory controls over the industry.

Smart data

Bar chart of % of voting power showing  Anthony Tan will have majority voting control at Grab

Not since Facebook’s Mark Zuckerberg has a top internet entrepreneur wielded such power over his company. Grab co-founder and chief executive Anthony Tan will control 60.4 per cent of the south-east Asian “super app” when it joins the Nasdaq this year via a Spac, or special purpose acquisition company, merger. That is despite Tan holding an equity stake of just 2.2 per cent.

Meanwhile, other important shareholders have had their voting power diluted via the dual-class share structure, as the chart above shows. The holdings were revealed in papers filed alongside Grab’s announcement last week. For more revelations about Grab’s record Spac merger, click here.

About the author

Erin Clark

Erin is a sports enthusiast who loves indulging in occasional football matches. She is a passionate journalist who flaunts a perfect hold over the English language. She currently caters her skills for the sports and health section of Report Door.