Tue, Mar 22, 2005 - Page 10 News List

UMC needs approval for share deal

CHINA INVESTMENT UMC would have to apply for government approval to receive 15 percent of the shares of He Jian Technology, officials said


United Microelectronics Corp (UMC, 聯電) needs to gain the same approval as other China-bound investments before receiving any stock from its Chinese ally, an official from the Ministry of Economic Affairs said yesterday.

"We will review the yet-to-be-received application and decide whether to give the green light or not," said Chang Ming-pin (張銘斌), deputy executive secretary of the ministry's Investment Commission.

Chang made the comment after the world's second largest made-to-order chipmaker yesterday published half-page advertisements in the nation's major newspapers saying that UMC is seeking to acquire a 15-percent stake in He Jian Technology (Suzhou) Co (和艦), currently valued at US$110 million, in exchange for past assistance and future help.

In the advertisement, UMC chairman Robert Tsao (曹興誠) denied that the company had been involved in illegal activities by providing free assistance to the Chinese chipmaker. Moreover, he said the company had last Friday applied to the Investment Commission for assistance on the stake transfer.

Chang confirmed that the commission yesterday morning had received a letter from UMC that asks for "administrative guidance" regarding the transfer of shares from He Jian.

"Actually we have never dealt with this kind of case before so we have no idea of what to do at this point," Chang said in a telephone interview. "But if they want to use exchange technology transfer for the Chinese stock, they need to file an application to obtain permission from us."

During a question-and-answer session at the legislature yesterday, Minister of Economic Affairs Ho Mei-yueh (何美玥) said that any form of stake transfer is considered "investment."

She said that should UMC fail to apply for the government's permission to invest in the Chinese chipmaker, the company will be fined between NT$50,000 and NT$25 million, in accordance with the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area (兩岸人民關係條例).

While Ho said the ministry will deal with the issue impartially, the latest development with UMC is apparently a thorny issue for the government -- in that even if the company files an application to invest in China, it is uncertain whether it will be approved.

The government has stipulated that Taiwanese chipmakers can set up a total of three 8-inch semiconductor factories in China. Taiwan Semiconductor Manufacturing Co (台積電) gained permission for one plant last year, while applications from ProMOS Technologies Inc (茂德科技) and Powerchip Semiconductor Corp (力晶半導體) are being reviewed.

The issue also drew intensive discussion yesterday among financial regulators over whether the 15-percent stake is fair to shareholders.

To safeguard investor interests, Financial Supervisory Commission Chairman Kong Jaw-sheng (龔照勝) said the commission will ask UMC to explain within a week how the company came up with the allotment of a 15-percent stake as compensation from He Jian.

Kong said this kind of stake transfer should first undergo professional appraisal and then be passed by UMC's board. If UMC did not abide by the regulation, it will be fined between NT$120,000 and NT$2.4 million.

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