TAIPEI (Reuters) - China’s Tsinghua Unigroup’s $2.6 billion offer for stakes in three Taiwanese chip firms will undergo unprecedented scrutiny by a new government less friendly toward its giant neighbor, complicating the chance of success.

The logo of Tsinghua Unigroup is seen at its office in Beijing, China, November 15, 2015. REUTERS/Kim Kyung-Hoon

The Chinese state-backed conglomerate aims to buy into the island’s technology sector as a step toward building China’s own semiconductor industry. But the timing of its offers, during a Taiwan election in which deepening cross-straits economic ties was a hot topic, left the firm a target of political attack.

Following civil war in China, Nationalist forces fled in 1949 to Taiwan which has been self-ruled ever since. But China regards it as a wayward province to be taken back by force if necessary, fuelling fears among Taiwanese of Chinese influence in the island’s foremost industries.

Such fears prompted the government to subject Tsinghua’s offers to review by the newly elected parliament, national security advisors and financial regulators, and to request its management team make its case personally to a government panel, Taiwanese regulators and executives at the targeted firms said.

“We said from the start that it will not entirely be approved,” said Emile Chang, executive secretary of Taiwan’s Investment Commission, the agency under the Ministry of Economic Affairs in charge of reviewing inbound and outbound investment.

“Whether one or two of the cases can pass, we need to see the review process,” Chang told Reuters at a recent briefing.

Tsinghua is aware it may not receive approval for all three deals due to the change in government, but overseas acquisitions will continue to focus on Taiwan and the United States, a person familiar with Tsinghua’s thinking told Reuters, declining to be identified due to the sensitivity of the matter.

Tsinghua, which is yet to submit investment plans to Taiwan regulators, declined to comment when contacted by Reuters.

NATIONAL SECURITY

Tsinghua made offers in quick succession late last year for a quarter each of chip testing and packaging companies Powertech Technology Inc, ChipMOS Technologies Inc and Siliconware Precision Industries Co Ltd (SPIL).

The company plans to inject a total of $2.6 billion into the three in exchange for stakes plus one board seat at each with no management control. The offers came after Micron Technology Inc rejected Tsinghua’s informal $23 billion takeover bid on the presumption of U.S. national security concerns.

“Security and business concerns over relying on Chinese suppliers include intellectual property and trade secrets protection, competitiveness, and innovation,” said Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council, in a commentary labeling Tsinghua’s moves “hostile”.

Taiwan’s new government will therefore need policies that keep businesses free of Chinese control to ensure Taiwan remains a major player in the global technology supply chain, he said.

CEDING CONTROL

President-elect Tsai Ing-wen of the independence-leaning Democratic Progressive Party (DPP) - which was elected by a landslide - said when campaigning the offers were problematic and could lead to Taiwan ceding control of its tech industry.

“From the country’s point of view, this is not just a business deal,” said Wu Tsong-tseng, a DPP adviser on technology issues during the election.

Shareholders of Powertech and ChipMOS approved the plans in January as they seek capital to expand and survive in a global chip sector experiencing record merger and acquisition activity.

SPIL scheduled a shareholder vote for Jan. 28 but postponed due to the political timing, spokesman Byron Chiang said.

Powertech Chairman D.K. Tsai said the other deals, announced six weeks after its own, were unexpected. He said he was committed to seeing through Powertech’s application and that he would “respect any (government) decision.”

“I am regretful that this matter became emotional for society and a political factor,” Powertech’s Tsai told reporters after shareholders accepted the offer.