UMC suspending new solar energy investments

MARKET UNCERTAINTY::With solar energy companies struggling to survive, a senior UMC official said there would be no new investments until the outlook improves

Staff writer, with CNA

Thu, Aug 23, 2012 - Page 14

United Microelectronics Corp (UMC, 聯電), the world’s second-largest contract chipmaker, yesterday said it has decided to suspend its new investments in the solar energy sector because of the market uncertainty faced by the industry.

Chief financial officer Liu Chi-tung (劉啟東) said the company was calling a halt to new investments in the field until the market outlook for solar energy products improves.

UMC owns several solar energy related subsidiaries. Among the units, NexPower Technology Corp (聯相光電), in which the chipmaker owns a 44.16 percent stake, specializes in thin-film silicon solar photovoltaic module production.

Solar energy companies have been struggling to survive in an industry burdened by massive overcapacity, with many firms saddled with large debts amid weak demand and low average product prices.

Among them, China-based Suntech Power (尚德), one of the world’s leading solar panel suppliers, has a debt load of US$2.2 billion and is reportedly on the verge of insolvency.

The industry-wide slump has also caused Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chip maker and a UMC rival, to re-evaluate its investments in the sector.

Earlier this month, TSMC said it would not rule out the possibility of unloading its holdings in solar battery maker Motech Industries Inc (茂迪) at an appropriate time.

TSMC holds a 20 percent stake in Motech Industries.

When asked whether UMC will follow TSMC in trimming its solar energy investments, Liu said the company was studying the earnings outlook for its investments in the field, with some of the companies it has invested in having already closed down.

The UMC’s announcement on solar energy investments came a day after it decided to close its foundry operations in Japan, which has suffered extensive losses because of declining demand and Japan’s unstable electricity supply following the deadly earthquake and tsunami in March last year.

In the first half of this year, UMC Japan posted a net loss of ¥1.59 billion (US$20.05 million) on sales of about ¥3.7 billion. As of June 30, UMC Japan had assets worth ¥16.85 billion and liabilities of ¥2.77 billion, according to UMC.