UMC asks Taipei not to appeal ruling on Tsao

United Microelectronics Corp (UMC, 聯電), the world's second-biggest contract chipmaker, called on the government not to appeal a ruling favoring its former chairman and to speed up the pace in relaxing restrictions on chip investment in China to safeguard its competitiveness.

On Friday, the Hsinchu District Court dismissed charges against former UMC chairman Robert Tsao (曹興誠) of illegally helping Chinese chipmaker He Jian Technology (Suzhou) Co (和艦科技) use UMC resources -- including technology -- without compensation.

In February, He Jian offered to give 15 percent of it stake in return for UMC assistance, but UMC was unable to accept it as the government restricts local chipmaker from investing in Chinese chipmakers.

"We are very pleased with the results, which bring justice to UMC. We hope this will be the end to the lawsuits," UMC chairman Jackson Hu (胡國強) told reporters during a sports event on Saturday.

Hu said it made no sense for the government to limit local chipmakers' investments in China, as US chip giant Intel Corp intends to make chips in China using advanced 90 nanometer and 65 nanometer technology.

Taiwanese chipmakers are only allowed to make chips on less advanced 0.18-micron technology.

Hu said he could hold further discussions with Minister of Economic Affairs Steve Chen (陳瑞隆) today on the means by which UMC could legally obtain the 15 percent stake in He Jian.

"Ownership would enhance the ties between the companies," Hu said.

Bigger rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) also urged the government to allow local firms to make chips using relatively more advanced 0.13-micron technology in China.

TSMC chairman Morris Chang (張忠謀) said China is a fast-growing market and could enjoy explosive growth in future, but the technology TSMC uses to make chips at its Chinese plant in Shanghai cannot satisfy customer demand.

TSMC, the only local chipmaker that has begun manufacturing chips in China, said it would boost monthly output to 50,000 wafers in the middle of next year.

Tsao, meanwhile, was unlikely to end his legal battle with the government. Tsao intends to file a lawsuit against the ministry's Investment Commission, claiming the government agency has abused its authority and forged documents.

The commission's contention that UMC and Tsao illegally invested in China was partly based on reports and corporate documents made by China Credit Information Service Ltd (中華徵信所).

Tsao said the reports and documents compiled by China Credit were false and that the commission was behind the forgery.

The commission says it has acted in accordance with the law.