Number two chip maker issues bonds to investors

United Microelectronics Corp (UMC, 聯電), the world's second-largest made-to-order semiconductor supplier, said it sold US$381 million of bonds convertible into its shares to overseas investors.

The zero-coupon bonds mature in 2008 and can be converted into the Taipei-based chipmaker's American depository shares at US$3.814 each, according to a filing to the Taiwan Stock Exchange yesterday, which is a 17 percent premium to the Sept. 27 closing price.

The bonds were 10 times oversubscribed, company spokesman Alex Hinnawi said.

"A better-than-expected subscription means investors think UMC's 90-nanometer technology will help it catch up" to global No.1 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), said Michael On, who manages the equivalent of US$30 million as managing director at Beyond Asset Management Co in Taipei.

UMC reached a milestone last month with the shipment of more than 100,000 customer wafers for products using the new 90-nanometer technology, which allows it to make more chips per silicon wafer by shrinking chip sizes, helping to cut costs.

The funds raised from the bond sale will be used for the purchase of raw materials, the statement said.

Separately, UMC yesterday said it plans to buy back 250 million of its own shares at between NT$14 (US$0.42) and NT$30.65 each.

The stock will be bought between Sept. 30 and Nov. 29 and made available to UMC employees, the Hsinchu, Taiwan-based company said in a statement to the stock exchange in Taipei.

Shares of UMC rose 1.3 percent to NT$19.95. The stock has gained 7.3 percent this year, compared with a 2.1 percent decline in the TAIEX.