UMC faces NT$25 million punishment

United Microelectronics Corp (UMC, 聯電), the world's second-biggest supplier of made-to-order chips, may be fined as much as NT$25 million (US$780,786) for helping He Jian Technology (Suzhou) Co (和艦) set up a plant in China, a government official said.

The Ministry of Economic Affairs may penalize the chipmaker for violating the nation's laws restricting investments in China and technology transfer, a ministry spokesman surnamed Chen said.

Prosecutors indicted former UMC chairman Robert Tsao (曹興誠), 58, on Monday over the Hsinchu-based company's ties to He Jian.

UMC last month threatened to leave Taiwan's stock exchange in protest over a fine for delays in disclosing accounting errors.

"We'll refer to the indictment and ask UMC to explain" the company's relations with He Jian, Chen said.

UMC's larger rival Taiwan Semiconductor Manufacturing Co (台積電) is the nation's only company to have gained government approval to make chips in China.

Tsao, who quit on Monday, was charged with breach of trust and violating accounting law when helping Suzhou, China-based He Jian set up a plant in 2002, prosecutors said.

John Hsuan (宣明智), 53, was also indicted and quit as vice chairman on Monday. The two executives could face jail terms of between six months and five years for the alleged violations, district prosecutor Tsai Ten-yuan (蔡添源) said.