Abstract: This work explores the inter-region investment
behaviors of Integrated Circuit (IC) design industry from Taiwan to
China using the amount of foreign direct investment (FDI). According
to the mutual dependence among different IC design industrial
locations, Lotka-Volterra model is utilized to explore the FDI
interactions between South and East China. Effects of inter-regional
collaborations on FDI flows into China are considered. The analysis
results show that FDIs into South China for IC design industry
significantly inspire the subsequent FDIs into East China, while FDIs
into East China for Taiwan’s IC design industry significantly hinder
the subsequent FDIs into South China. Because the supply chain along
IC industry includes upstream IC design, midstream manufacturing, as
well as downstream packing and testing enterprises, IC design industry
has to cooperate with IC manufacturing, packaging and testing
industries in the same area to form a strong IC industrial cluster.
Taiwan’s IC design industry implement the largest FDI amount into
East China and the second largest FDI amount into South China
among the four regions: North, East, Mid-West and South China. If IC
design houses undertake more FDIs in South China, those in East
China are urged to incrementally implement more FDIs into East
China to maintain the competitive advantages of the IC supply chain in
East China. On the other hand, as the FDIs in East China rise, the FDIs
in South China will successively decline since capitals have
concentrated in East China. In addition, this investigation proves that
the prediction of Lotka-Volterra model in FDI trends is accurate
because the industrial interactions between the two regions are
included. Finally, this work confirms that the FDI flows cannot reach a
stable equilibrium point, so the FDI inflows into East and South China
will expand in the future.