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TSU lawmakers disrupt UMC's board meeting

`WSJ' report on UMC * UMC has agreed to construct a US$1 billion semiconductor factory in Suzhou through a company called He Jian Technology. * Other high-ranking managers at He Jian were former UMC officials.

Two TSU lawmakers attended a board meeting for contract chipmaker United Microelectronics Corp (聯華電子) yesterday, in an attempt to learn whether the company had invested in China without government permission.

But their efforts proved futile. Instead, the pair got into a quarrel with UMC Chairman Robert Tsao (曹興誠).

Holding up the April 1 edition of the Asian Wall Street Journal, TSU legislative caucus leader Lo Chih-ming (羅志明) and lawmaker Lin Chih-lung (林志隆) demanded to know whether reports of UMC's investment in China were true.

According to the Journal and other news reports, UMC has agreed to construct a US$1 billion semiconductor factory in Suzhou through a company called He Jian Technology (和艦科技) despite an existing ban on chip investment in China.

The Journal said He Jian, which is owned by British Virgin Islands-based Invest League Holdings Ltd, broke ground earlier this year on the Suzhou plant.

The lawmakers yesterday questioned the role of Chen Chun-ku (陳春固), chairman of He Jian and a high-ranking manager at UMC until March.

"We believe He Jian is UMC's subsidiary company in China," the TSU lawmakers alleged.

The Journal report also noted that other high-ranking managers at He Jian were former UMC officials -- which Lo said was evidence that UMC was backing the Chinese company.

Lo asked whether UMC had invested NT$300 billion in He Jian and offered technology to the company. Tsao said he didn't know where that figure came from.

Lin asked about the relationship between UMC and Happy Wealth, a broker that deals in chip equipment. According to the Journal article, UMC agreed to sell eight-inch wafer equipment to Happy Wealth at price below market standards.

"UMC has no relationship with Happy Wealth, and the deal to sell the eight-inch equipment has been cancelled," Tsao said.

The UMC chairman in turned accused Lin of spreading rumors about the company and damaging its reputation.

The two legislators walked out the meeting after their argument with Tsao.

At a press conference later in the day, Tsao criticized the two lawmakers for bringing the confrontational style of politics normally reserved for the legislature to the board meeting of a private company.

"Their performance is a very bad example," Tsao said.

Lo and Lin held a press conference of their own, saying they would urge the Cabinet to investigate the case.

The pair of lawmakers last week had announced their intentions to attend UMC's annual board meeting. In a pre-emptive move, the company said the meeting would be off limits to reporters.

As shareholders, Lo and Lin were allowed to attend the meeting.

Despite persistent reports that UMC has invested in He Jian, UMC has denied the reports.

Whether Taiwanese chip companies should be allowed to invest in China has been a hot-button issue for the TSU. The party earlier this year opposed government efforts to allow eight-inch investment across the Strait.

The Cabinet in March said the ban would be relaxed, though conditions mean that just UMC and competitor Taiwan Semiconductor Manufacturing Co (台積電) will be allowed to go.
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