UMC implements forced leave to lower expenses

United Microelectronics Corp (UMC, 聯電), the world’s second-biggest contract chipmaker, yesterday started imposing forced leave to cut costs as the chip industry braces for a downturn.

UMC has requested all employees “aggressively” arrange their annual vacation plans, starting this month, said a company official, who declined to be named.

Employees were requested to take a minimum of four days of leave each month in the initial phase, the official said.

The new measure is also aimed at discouraging employees from accumulating unused leave and requesting cash compensation.

The cost-cutting measure could ultimately force some staff to take unpaid leave after they have used up their annual leave, the company official said.

The UMC official’s remark came in the wake of a report by the Chinese-language United Evening News yesterday that UMC, which stopped hiring in the third quarter, had asked employees to take unpaid leave.

It also came after the company’s bigger rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), announced a day earlier that it was expanding its unpaid leave scheme to avoid layoffs.

On Wednesday, TSMC, the world’s largest custom-chip maker, told employees to take four to five days of unpaid leave a month, beginning this month, to extend its cost-cutting measures.

In October, dynamic random access memory (DRAM) chip makers such as Nanya Technology Corp (南亞科技) and Inotera Memories Inc (華亞科技) asked their employees to take a longer-than-usual break to save costs amid falling demand. ProMOS Technologies Inc (茂德科技) followed suit last month.

ADDITIONAL REPORTING BY STAFF WRITER