The Taiwan's government has officially opened the doors for China-based enterprises to invest in the local TFT-LCD panel and semiconductor industries, with China investors not allowed to exceed 10% of shares or to hold controlling stakes in any Taiwan-based companies, according to the Ministry of Economic Affairs (MOEA).

China investments in the flat panel and semiconductor industries should aim to promote industrial cooperation between the two sides but not for financial purpose, commented Huang Chung-chiou, vice minister of the MOEA.

While the Taiwan government will not bar China's state-run enterprises from investing in the local flat panel and semiconductor companies, it will give close scrutiny to investment applications from China-based sovereign funds.

The securities authority in Taiwan will also monitor the amount of America depositary receipts (ADRs) of Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics Corporation (UMC) and AU Optronics (AUO) that China-based enterprises have bought in the US and plan to convert into common shares in the local securities market, said a government official.