TAIPEI, Aug 29 (Reuters) - Billionaire Foxconn founder Terry Gou's decision to stand for Taiwan's presidency has thrown a spanner in the works of a January election expected to return the ruling party for a third term at a time of soaring tensions with China.

His wildcard entry as an independent candidate has been criticised by the main opposition party, the Kuomintang (KMT), which fears Gou could split its vote, and is being closely watched by the ruling Democratic Progressive Party (DPP) in case he does against expectations unite their challengers.

Gou, who stepped down as chairman of major Apple supplier Foxconn in 2019 but remains one of Taiwan's most recognised figures internationally, has said he wants to "integrate" opposition forces to "take down" the DPP who he believes is risking war with China.

The election comes at a time that relations between Taipei and Beijing, which claims the island as its own and has refused to rule out seizing it by force, have soured. Beijing has staged multiple military drills around the island in recent years, drawing condemnation from the United States and its allies.

The DPP and their candidate William Lai, which opinion polls show ahead by a comfortable margin, have repeatedly clashed with Beijing which paints them as secessionists.

Before he announced his bid to run on Monday, Gou earlier this year sought the candidacy for the opposition KMT, which advocates for friendlier relations with Beijing. He lost to New Taipei City Mayor Hou Yu-ih and in a Facebook post at the time said he would support Hou.

The KMT has not disguised its anger at Gou's entry into the race for president, seeing his move as opening the way to a victory for the DPP's Lai by splitting the opposition vote.

"The DPP will be setting off the fireworks. I hear the restaurants are all booked out tonight. The DPP is celebrating," KMT chairman Eric Chu told reporters late on Monday.

The KMT's candidate Hou has languished in the polls, generally coming third to former Taipei mayor Ko Wen-je of the small Taiwan People's Party (TPP).

'FAMILY MATTER'

The DPP said Gou's decision was a "family matter" for the KMT, and it respects the right of citizens to run.

But the ruling party "must take the development very seriously", a senior DPP official told Reuters on condition of anonymity as they were not authorised to speak to the media.

Gou's bid could facilitate a possible partnership between the KMT and Ko's TPP, the official added.

Most recent polls put the DPP's Lai on around 35-40% of the vote, around 10 percentage points clear of his closest rival.

Gou has for months said the best way to close that gap is to forge an opposition tie-up, pointing out that there are more voters who intend to vote against the DPP than for them.

Taiwanese media, citing analysts and lawmakers, has been filled with speculation on how Gou may be trying to arrange this and secure a position in the next government if the DPP loses.

"I aspire to become the greatest common denominator of unity," Gou said on Monday.

"I will continue to invite the other two candidates from the opposition parties to sit down together, to have coffee, tea or whatever, to discuss national affairs in a congenial manner."

While some members of the opposition parties have appeared open to the idea of teaming up, the TPP's Ko dismissed the suggestion when quizzed by media at a campaign event last Saturday. "Why talk about this?," he said.

Ko has kept a low profile since Gou's announcement, though wrote cryptically on his Facebook late on Monday that "we should only integrate under universal values, nothing else".

Taiwan has a first past the post presidential election system, so even if the DPP's Lai gets 40% of the vote with the rest more or less evenly distributed between the three other candidates, then he wins.

In 2000, a split in KMT support after a former member of the party ran as an independent allowed the DPP's Chen Shui-bian to win with little more than 39% of the vote, the first time the DPP had won the presidency.

While the DPP's reaction to Gou has generally been low key, it has prompted glee from some members.

Senior DPP lawmaker Wang Ting-yu posted on his Facebook page a cartoon he had drawn of three cars representing the three opposition candidates, Ko, Hou and Gou, in a game of "chicken".

"Which of the three will back down? Or will they go right to the end and collide?"

There's also no guarantee Gou will end up on the ballot.

To qualify as an independent, he has to collect close to 300,000 voter signatures by Nov. 2, according to election regulations.

The cut off date for political parties to register their candidates is not until Nov. 24, meaning it is theoretically possible for them to change their nominees, or withdraw them completely, before then.

Gou also failed to get the KMT's candidacy for the 2020 vote, fuelling speculation he would run as an independent but then months before the vote he said would not stand. (Reporting by Ben Blanchard and Yimou Lee; Editing by John Geddie and Michael Perry)