TSMC chairman Morris Chang said that just allowing one Chinese director on your board will make it difficult to protect your company's IP.

Chang's comments come as the new Taiwan government is reviewing China-backed Tsinghua Unigroup's plan to invest and take board seats in two Taiwanese chip test and packaging firms. The government is considering whether to open the island's chip design sector to Chinese investors.

China's Taiwan Affairs Office said last year plans by Tsinghua Unigroup to invest in Taiwan should not be politicised.

TSMC wanted to build an advanced plant in China late last year only after the island's government allowed such investments to be wholly owned to protect its intellectual property.

Taiwan required chip plant investments in China to operate under a joint venture structure, which to discourage its chip business from moving into China.