Wed, Aug 22, 2012 - Page 14 News List

UMC closing down Japanese subsidary to reduce costs

By Kevin Chen  /  Staff reporter

United Microelectronics Corp (UMC, 聯電) said yesterday its board had decided to shut down the company’s foundry business in Japan, as the world’s No. 2 contract chipmaker tries to integrate its resources and cut costs.

The Hsinchu-based chipmaker said UMC Japan, a wholly owned subsidiary based in Tateyama City, Chiba Prefecture, was facing a negative situation in Japan.

“Because of fast changes in global economy and industry trends, the needs of Japanese customers have declined. As the power supply became unstable after the massive earthquake in Japan in 2011, both up and down-stream semiconductor industries have either reduced production or closed factories to cope with the situation,” UMC said in a filing to the Taiwan Stock Exchange.

Since the Japanese subsidiary has not been able to effectively reduce its operating costs and its management efficiency remains unsatisfactory, the board decided to dissolve UMC Japan and liquidate all of its assets, according to the filing.

UMC said the move would not disrupt its global services as the company would use its operations in Taiwan and Singapore to meet the needs of Japanese customers.

With a capitalization of ¥81 million (US$1.02 million), UMC Japan operates a 200mm (8-inch) fab with a monthly capacity of 20,000 wafers. As of June 30, the unit had a total assets of ¥16.85 billion and a debt of ¥2.77 billion.

UMC said it would book asset impairment losses in the upcoming quarters, adding that it would sell non-core business units to offset the possible impact the shutdown of UMC Japan might have on the company’s balance sheet.

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