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Mosel Vitelic abandons plan for Quebec chip plant

Reuters, Friday 15 December 2000, 4:23 pm Eastern Time

MONTREAL, Dec 15 (Reuters) - Taiwanese semiconductor manufacturer Mosel Vitelic Inc. has abandoned plans to build a C$3 billion ($2 billion) plant in Canada, after Ottawa expressed concerns about the company's demand for heavy subsidies to fund the plant, the Canadian government said on Friday.

At a news conference in Ottawa, Industry Minister Brian Tobin said Mosel officials had withdrawn the company's application to pursue the construction of a semiconductor fabrication facility in Ste-Anne-de-Bellevue, Quebec, near Montreal.

"The company cited market variables as the reason for withdrawing its proposal. As part of its exhaustive due diligence process, the government of Canada had also conveyed concerns to (Mosel) regarding its business plan," the minister said.

"It was very clear we could not support that level of assistance. There's a limit to how much taxpayers ought to subsidize, even the development of new technology," he said.

He said the fact that Mosel had doubled the amount of assistance it was asking for in its second business plan reflected a "certain inherent instability in the solidity" of the firm's business plan.

Mosel vice-president John Seto said in a statement the company continues to consider Canada among its top choices to establish a facility in North America. He added the company will consider a new business plan.

Mosel had been seeking substantial tax credits from the Quebec government and other funding from both Quebec and Ottawa, including loan guarantees, to build the Quebec plant.

Tobin said Canada would remain available to discuss this new plan with Mosel and said media reports stating that the company was asking for a total of C$2.6 billion in federal and provincial assistance were "in the ballpark" (roughly correct).

($1 equals $1.52 Canada)