Prosecutors and the Criminal Investigation Bureau yesterday said there were no political motives behind a probe into alleged illegal investments in China by United Microelectronics Crop (UMC, 聯電), and they pledged to step up their investigation.
UMC yesterday denied allegations of illegal investment in China's He Jian Technology (Suzhou) Co (
Fending against a loss in competitiveness to rising Chinese firms, the government restricts local semiconductor companies from setting up production lines in China.
A defiant UMC chairman Robert Tsao (
Tsao also said that the investigation began from a what he called a "forged accusation letter," which was written by a former He Jian employee by the name of Chen Cheng-yu (
UMC said it hoped to acquire He Jian if and when the government relaxes or scraps altogether restrictions on China-bound investment. Financial authorities in the past signaled they are willing to do so.
"UMC will be able to tap into the Chinese market by merging with He Jian soon after the Chinese market is ripe, or after the cross-strait relations improve," Tsao said in a statement published in local newspapers yesterday.
Tsao's comments came after He Jian president Shyu Jann-hwa (
"It's no secret that UMC is keeping friendly relations with He Jian and giving aide to the company," Tsao said.
UMC has helped the Suzhou-based foundry company supply chip orders from UMC customers in the fast-growing Chinese market, including Xilinx Inc and Infineon Technologies AG, Tsao added.
Speculation that high-ranking UMC executives had bankrolled, or subcontracted orders to He Jian were simply untrue, Tsao said.
Tsao also rejected "hollowing out" allegations which would jeopardize UMC's competitiveness, as prosecutors suspected the Hsinchu-based chipmaker illegally transferred technology, capital and personnel to He Jian.
He Jian said in a statement that it is an independent enterprise with foreign investment dedicated to semiconductor wafer foundry business and says no direct relationship with UMC exists.
In response to Tsao's accusations, Tsai Ten-yuan (
Tsai also said prosecutors found evidence of illegal conduct in documents seized from UMC, and would summon Tsao and UMC vice chairman John Hsuan (
Tsai also said prosecutors welcomed Tsao voluntarily showing up for questioning in order to speed up the investigation.
Taiwan Semiconductor Manufacturing Co (TSMC,
Investigation into UMC's alleged illegal investments drove down the company's stock value. UMC shares fell almost 3 percent to NT$20.4 yesterday on the benchmark Taiwan Stock Exchange.
Going against the grain, JPMorgan analyst Bhavin Shah cautiously maintained his "underweight" rating for the UMC, despite the a potential industrial upturn.
UMC may not have any significant financial impact should the investigation establish a link between UMC and He Jian, but the probe could be disruptive to the normal running of the company and is certainly likely to affect its reputation, he said.
"This will make it difficult for institutional investors to justify owning [UMC] stock," Shah said.
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