Exchange probing UMC

Taiwan Stock Exchange Corp said it is investigating why United Microelectronics Corp (UMC, 聯電), the world's second-largest made-to-order chipmaker, on Wednesday filed its restated results with the Taiwanese regulator five hours after posting them in the US.

"We're looking into the incident to see why and how it happened like this, because it's unfair to Taiwanese investors," Chiu Chin-ting (邱欽庭), vice president at the Taiwan Stock Exchange, said yesterday.

Chiu said UMC could have made a greater effort to make this known in Taiwan earlier and faster.

"UMC may be subjected to a penalty of NT$50,000 (US$1,504) if evidence shows it acted too slow," she said.

The regulator's review will be concluded within a week, he added.

The stock exchange's response came after People First Party Legislator Christina Liu (劉憶如) asked the regulator to look into alleged "unfair disclosing of information" by UMC in Taiwan and in the US.

If the stock exchange doesn't do anything, then it will have a hard time explaining its inaction to the Taiwanese investors, Liu said.

UMC on Wednesday said last year's loss under US Generally Accepted Accounting Principles was three times more than originally reported because of accounting errors.

The announcement was first made in the US, where the company's US depositary receipts trade, at around 5.30am Taiwan time. A similar statement to the regulator's bulletin board in Taiwan was not filed for another five hours.

In the statement, the company said the NT$14.2 billion (US$424 million) loss was revised from a NT$4.7 billion shortfall because of erroneous assessments of charges, goodwill, share bonuses and derivatives. UMC's results for last year under Taiwanese standards -- a profit of NT$32 billion -- will not be restated.

Taiwan Ratings Corp (中華信評) said yesterday that UMC's restatements have no immediate effect on the company's credit rating of `BBB+' or its `stable' outlook.

"The restatements are mainly related to non-cash charges and adjustments to goodwill, derivative instruments and employee stock bonuses," Taiwan Ratings said in a release.

"Taiwan Ratings will continue to closely monitor the situation, with the primary focus on the business challenges facing UMC to improve its return on capital and to sustain its market leadership in the highly competitive semiconductor foundry sector," the ratings agency said.

UMC's shares closed 1.12 percent higher at NT$18.10 yesterday. Its US depositary receipts fell 0.63 percent to US$3.16 in New York.

Both Merrill Lynch and SinoPac Securities Corp (建華證券) said they would maintain a target price of NT$22 for UMC.