TAIPEI (Reuters) - Taiwan has approved an investment plan by United Microelectronics Corp (UMC) to set up a chipmaking plant in China with mainland partners, the island's economics ministry said on Wednesday.

UMC, a leading contract chipmaker, said in October that it would build a foundry in the Chinese city of Xiamen in a three-way joint venture with the local government and Fujian Electronics & Information Group.

Taiwan's world-class semiconductor industry is the economy's crown jewel and the government regulates chipmaking investments into China, restricting the most advanced technologies from being exported to the mainland.

UMC has said that the investment could reach US$1.35 billion (S$1.69 billion) in the next five years and that it would ultimately look to take full ownership of the plant. UMC said at the time that funding instalments would begin in 2015 based on the progress of the joint venture.

Taiwan's Investment Commission, in charge of reviewing inbound and outbound investments under the economics ministry, said that it had approved an investment of US$710.64 million.

The approved amount would be provided between UMC and its China-based subsidiary Hejian Technology (Suzhou) Co for the joint venture, which will engage in 12-inch wafer manufacturing, the commission said.