The board of United Microelectronics Corp (UMC, 聯電) yesterday approved a proposal to allow its Chinese unit, Hejian Technology (Suzhou) Co Ltd (和艦科技), to file for a 2.5 billion yuan (US$380 million) initial public offering (IPO) in China.
Hejian’s IPO, aimed at funding capacity expansion and to vie for a stronger presence in China, is the latest in a slew of local firms looking to debut the shares of their Chinese subsidiaries.
Foxconn Industrial Internet Co’s (FII, 富士康工業互聯網) IPO on the Shanghai Stock Exchange earlier this month saw its market value surpass its Taipei-listed parent company, Hon Hai Precision Industry Co (鴻海精密).
“We began taking a serious look at this IPO project prompted by some similar [IPOs] launched by local peers,” UMC chief financial officer Liu Chitung (劉啟東) told a media briefing.
The world’s third-largest contract chipmaker said the IPO would help it curb a talent drain at Hejian by allowing the firm to implement an employee stock ownership program, Liu said.
Hejian, which has an 8-inch fab in Suzhou, Jiangsu Province, suffered a high employee turnover of between 15 and 20 percent last year because of constant poaching by its Chinese rivals, Liu said.
Based on UMC’s plan, Hejian is to offer up to 400 million new shares to raise about 2.5 billion yuan and plans to use most of the proceeds to boost its capacity from 65,000 wafers per month to 75,000 wafers.
Hejian has two Chinese subsidiaries: United Semiconductor (Xiamen) Co (聯芯) and UnitedDS Semiconductor (Shandong) Co (聯璟半導體).
United Semiconductor operates a 12-inch fab and UnitedDS Semiconductor designs chips.
UMC said the Hejian IPO would not adversely affect its revenue and profit as the three units contributed a combined 11 percent of UMC’s total revenue in the first quarter this year.
After the IPO, UMC would hold about an 87 percent stake in Hejian, down from 98 percent.
“An A-share listing on the Shanghai Stock Exchange provides an ideal path for UMC to quickly capitalize on the rapid growth of China’s semiconductor market and facilitate Hejian’s long-term development,” UMC joint president Jason Wang (王石) said in a statement.
The move is expected to help expand UMC’s market share and further increase its scale of production, technical quality and overall competitiveness, he said.
The proposed IPO is subject to shareholders’ approval at an extraordinary meeting scheduled for Aug. 20.
The board also approved a plan to buy the remaining 84.1 percent of a joint venture with Fujitsu Semiconductor Ltd for ¥57.63 billion (US$521 million).
The joint venture, Mie Fujitsu Semiconductor Ltd (MFS), operates a 12-inch fab in Japan.
UMC currently owns a 15.9 percent stake in the company.
“MFS is totally complementary to UMC in terms of customer portfolios and product lineups,” Liu said. “MFS mostly makes chips used in the automotive sector and for Internet of Things apps. Its customers are largely Japanese automakers.”
MFS posted revenue of ¥70.9 billion last year and a net profit of ¥2.66 billion.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure