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Viewing cable 09AITTAIPEI405, EXBS: TAIWAN MONTHLY REPORTING CABLE - MARCH 2009

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Reference ID Created Released Classification Origin
09AITTAIPEI405 2009-04-06 08:11 2011-08-23 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY American Institute Taiwan, Taipei
VZCZCXYZ0001
PP RUEHWEB

DE RUEHIN #0405/01 0960811
ZNR UUUUU ZZH
P 060811Z APR 09
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 1305
RHMFIUU/USCBP WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
UNCLAS AIT TAIPEI 000405 
 
SENSITIVE 
SIPDIS 
 
STATE FOR ISN/ECC - YWONG, ACHURCH, NJOHANSON, AND ROWEN 
STATE FOR EAP/TC - MTOYRYLA, DPARKER 
STATE FOR ISN/MTR - PDURHAM, SBOYER, JMAYES, AND RPALMIERO 
DHS/CBP/INA FOR MAWATT 
DOE/NNSA/INECP FOR TPERRY AND SJONES 
 
E.O. 12958: N/A 
TAGS: ETTC MNUC PARM PREL KSTC KNNP TW
SUBJECT: EXBS: TAIWAN MONTHLY REPORTING CABLE - MARCH 2009 
 
REF:  Taipei 381 and previous (notal) 
 
I.  BROAD ITEMS OF INTEREST TO ADVISORS AND AGENCY MANAGERS: 
1. (U) On March 2, the Advisor attended the Taipei International 
Machine Tool Show.  This year's show was most notable for sparse 
attendance by potential buyers as compared with last year. 
(U) According to statistics released by the Taiwan Machine Tool 
Foundation (TMTF), Taiwan exported US$3.721 billion of machine tools 
in 2008, a 5.9% increase from 2007.  Exports of metal-cutting 
machine tools came to US$2.964 billion in 2008, up 7.4% from 2007; 
metal-forming machine tools amounted to US$756.57 million, up a mere 
0.5% from 2007. 
 
With respect to export destinations, the combined China and Hong 
Kong market ranked first by absorbing US$1.114 billion worth of 
Taiwan-made machine tools in 2008, down 14.2% from 2007, and 
accounting for 30% of total exports.  The U.S. ranked second with 
US$338.6 million, down 0.9% from 2007, and accounting for 9.1% of 
total exports.  Germany ranked third with US$224.09 million, up a 
whopping 45.2% and accounting for 6% of total exports. 
 
The TMTF's data also show that Taiwan imported US$1.535 billion of 
machine tools in 2008, down 39.9%.  Japan was Taiwan's largest 
import supplier by selling US$931.4 million of machine tools in 
2008, down 20% from 2007, and accounting for 60.6% of total imports. 
 The U.S. stood at second place with US$299.73 million, down 69.8% 
from 2007 and accounting for 19.5%.  The third place went to Germany 
with US$101.97 million, up a whopping 43.5% and commanding 6.6% of 
total imports. 
 
According to a press release by TMTF, the demand for imported 
machines is driven by domestic precision parts and metal products 
sectors, with demand for imported machines by high-tech industries 
such as semiconductors, information technology, electronics, 
communications and optoelectronics on the wane.  TMTF chief 
executive C.C. Wang said the domestic machine-tool industry has seen 
nose-diving exports since the beginning of the fourth quarter of 
2008. 
2. (U) On April 1, the Taiwan Memory Co (TMC), a joint state-private 
funded dynamic random access memory (DRAM) firm, announced that it 
has chosen Japan's Elpida Memory Inc. as its strategic partner to 
jointly develop and make new memory chips for mobile devices based 
on Elpida's technologies (reftel).  Through the venture, TMC aims to 
jointly develop its own technological capabilities for designing 
chips and to selling products and chips under its own or Elpida's 
brand name. 
 
(U) During the announcement, John Hsuan, head of TMC said "Elpida 
has shown strong intent to have detailed discussions with TMC about 
technological cooperation.  The companies will enjoy a deep 
cooperation." 
 
(U) To diversify from the existing computer memory chip market, TMC 
would focus on developing innovative DRAM chips, especially mobile 
DRAM, as well as outsourcing production to local DRAM companies 
using TMC's technologies. 
 
(U) TMC is continuing its discussions on a potential technological 
partnership with U.S. chipmaker Micron Technologies Inc.  The press 
report stated that Micron has not made a final decision as it first 
needs obtain approval from its Taiwan partner, Nanya Technology 
Corp. 
 
(U) TMC plans to recruit 800 people after it is established next 
month. 
(SBU) The EXBS Advisor plans to meet with a representative of the 
Japan Interchange Association in the next week or two to discuss 
export control implications of the partnership.  Taiwan's Strategic 
High-Tech Commodity List includes technology, but the regulations 
refer only to commodities.  This discrepancy in Taiwan's control of 
technology transfer has been an ongoing issue between the U.S. and 
Taiwan.  With the DRAM partnership announcement, this may be the 
opportune time for Taiwan to take action to close this regulatory 
loop. 
[Note: The Advisor has been sending regular updates via email on TMC 
formation to ISN/CATR, ISN/ECC, and DOC/BIS.] 
II. COMPLETED ACTIONS FOR THE REPORTING PERIOD 
A.  SITE ASSESSMENTS AND MEETINGS DURING REPORTING PERIOD: 
 
1.  (SBU) On March 5, the Advisor met with Professor Liu Fu-Kuo of 
National Chengchi University.  Professor Liu is a Taiwan 
representative to the Export Control Experts Group (XCXG) of the 
Council for Security Cooperation in the Asia Pacific (CSCAP), a 
non-governmental (second track) process for dialogue on security 
issues in the Asia Pacific.  According to Professor Liu, Taiwan has 
been involved in XCXG since 1998 as "other participant" after 
several rounds of negotiations with China.  Taiwan participates 
through invitations by the U.S. Because Taiwan is not a member of 
CSCAP, it does not participate in the General Conference or Steering 
Committee, both of which are CSCAP decision-making bodies. 
 
(SBU) Professor Liu stated that Taiwan's representatives to XCXG are 
vetted by China, and China has the final say on who can represent 
Taiwan at these meetings.  Because of this, it has been very 
difficult for Taiwan to develop its own cadre of experts in the 
nonproliferation field. 
 
(SBU) While a small step, as a start to Taiwan developing 
nonproliferation experts, the Advisor offered to speak to a group of 
graduate students at Chengchi University on the work of EXBS and, 
nonproliferation generally, in the near future. 
 
2.  (SBU) On March 20, along with Mr. Kuo Lin-wu, former Director of 
the Office of Homeland Security, Executive Yuan, the Advisor met 
with Mr. Chunto Tso, a Director of the Taiwan Institute of Economic 
Research (TIER).  TIER is a semi-private research organization that 
receives support from the Taiwan Ministry of Economic Affairs.  TIER 
provides research and policy guidance on Taiwan's membership in 
APEC.  The meeting was to get informal feedback and interest by 
existing non- or quasi-governmental organizations on the feasibility 
of establishing a Taiwan NGO to work on nonproliferation issues much 
like the Center for Information on Security Trade Controls (CISTEC) 
of Japan, and the Korea Strategic Trade Institute (KOSTI) of Korea. 
 
 
(SBU) Based on conversations with various officials over the last 
year, Taiwan is open to and is taking steps, albeit "baby" steps, to 
establish a CISTEC-type NGO.  While certain offices have the funds 
to do research and outreach work, they do not have the personnel to 
actually do the work.  Further, Taiwan is looking to decrease 
personnel as part of its official restructuring, not to increase 
personnel.  Therefore, establishing an NGO may be a way to advance 
nonproliferation work without increasing official personnel. 
 
B. BLUE LANTERN: 
 
None. 
 
III. TRAINING CONDUCTED DURING REPORTING PERIOD: 
 
1.  (U) On March 11-13, ICP train-the-trainer workshop was held in 
Taipei.  Ten Taiwan officials were trained during the workshop. 
These officials will be the trainers for the ICP deployments. 
 
2.  (U) On March 31, the Industry-Government Relations Forum: ICP 
kick-off was held in Taipei.  Over 140 Taiwan company 
representatives attend the Forum.  Madam Chun-Fang Hsu, Deputy 
Director General of the Bureau of Foreign Trade, and Robert S. Wang, 
Deputy Director of AIT, opened the Forum for Taiwan and the U.S., 
respectively. 
 
IV. UPCOMING TRAINING: 
1.  (U) Internal Control Program software deployment is scheduled 
for the following dates: 
 
Deployment 1 (Hsinchu) - April 16-17, 2009; 
Deployment 2 (Kaoshiung) - May 14-15; 
Deployment 3 (Taichung) - May 18-19; and 
Deployment 4 (Tainan) - June or July (TBC). 
 
2. (U) From April 6 - 10, 2009, Incident Command Systems Training, 
implemented by Customs and Border Protection, is scheduled to take 
place in Taipei.  (This program replaces the originally-scheduled 
Hazardous Materials Response Training.) 
 
3. (U) From April 27 - May 1, 2009, Radiological Detection Training, 
implemented by the Department of Energy, is scheduled to take place 
in the State of Washington. 
 
4. (U) A Commodity Identification Training, implemented by the 
Department of Energy, is notionally scheduled for June. 
 
5. (U) A WMD Investigation Training, implemented by Immigration and 
Customs Enforcement, is notionally scheduled for the second half of 
July.  The training was originally scheduled for the week of 
February 23. 
 
V. RED FLAG ISSUES: 
None. 
 
POC for this report is Mi-Yong Kim, EXBS Advisor.  Telephone 886 2 
2162 2347. 
 
YOUNG