When Taiwan relaxed restrictions on its technology companies investing in mainland China, it was an explicit attempt to help the island’s two biggest chipmakers - TSMC and UMC.

But the government seems not to have informed regulators from the Financial Supervisory Commission or the Taiwan Stock Exchange. Nine months after the liberalising measure was passed, UMC’s plan to become the first Taiwanese chipmaker to buy a Chinese counterpart has hit regulatory blocks in Taipei.

UMC wanted to take full ownership of He Jian, a Chinese chipmaker that it helped set up years ago in a controversial move, which resulted in UMC being fined T$5m (US$155,000) for illegal investments in China. UMC has a 15-per-cent stake in He Jian, but wanted to buy the remaining 85 per cent as well.