Wed, Sep 30, 2009 - Page 12 News List

UMC eyeing He Jian stake if China restrictions lifted

STAFF WRITER, WITH CNA

United Microelectronics Corp (UMC, 聯電) will apply to acquire a controlling stake in Chinese wafer foundry He Jian Technology (Suzhou) Co (和艦), a UMC executive said yesterday.

The executive made the announcement after Minister of Economic Affairs Shih Yen-shiang (施顏祥) said the government was considering to allow local foundries to invest in China via direct investment, acquisition or mergers.

The announcement received a positive reaction from UMC, but many chipmakers, including Vanguard International Semiconductor Corp (世界先進), Advanced Microelectronic Products Inc (元隆電子) and Episil Technology Inc (漢磊科技) said they had no plans to invest in China.

UMC, the world’s second-largest contract chipmaker, said in April that its board of directors had voted to pay US$285 million to acquire 85 percent of He Jian, a semiconductor foundry business established by former UMC employees in Suzhou, China, in late 2001. He Jian operates an 8-inch fab with a monthly capacity of 41,000 wafers.

Taiwan’s investment regulations stipulate that only three chip plants can be built by Taiwanese chipmakers in China using older technology, such as 8-inch wafers. According to this regulations, Taiwan has already reached its maximum.

The three Taiwan wafer fabs in China include one each by ProMOS Technologies Inc (茂德科技) and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電). The third fab has not actually been built, but belongs to Powerchip Semiconductor Corp (力晶半導體), which filed an application a few years ago.

The semiconductor industry has always been a strategically developed industry in Taiwan, and TSMC and UMC were once known as the two heads of wafer production. However, TSMC’s revenue has far exceeded that of UMC in recent years, so UMC is attempting to venture into the vast Chinese market in hopes of maintaining competitiveness, market observers said.

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