Fri, Feb 18, 2005 - Page 2 News List

UMC bosses to be questioned

SEARCHING FOR EVIDENCE Investigators said the company's chairman and vice chairman could be sent to jail if they are found to be involved in illegal investments

By Rich Chang and Jessie Ho  /  STAFF REPORTER

Prosecutors said they will summon United Microelectronics Corp's (UMC) chairman and vice chairman for questioning over the company's alleged ties with Chinese semiconductor start-up He Jian Technology (Suzhou) Co.

In the meantime, He Jian chairman Hsu Chien-hwa (徐建華) was released on NT$10 million bail last evening.

Prosecutors had earlier warned the court not to release Hsu, saying he might flee the country or forge evidence. They said yesterday that they will decide whether to appeal against Hsu's release only after they have gathered more information

"The suspects may be charged with breach of trust, and if found guilty, they could face a jail term of up to five years," said Tsai Ten-yuan (蔡添源), spokesman of the Hsinchu District Prosecutors' Office.

More than 180 investigators searched the homes and offices of UMC vice chairman John Hsuan (宣明智) and Hsu on Tuesday and Wednesday, and confiscated a large amount of account books and digital data.

Tsai said investigators are analyzing the documents and searching for evidence, and would later summon UMC chairman Robert Tsao (曹興誠) and Hsuan for questioning.

Minister of Economic Affairs Ho Mei-Yueh (何美玥) said that if the court ruled that UMC indeed had illegal ties with a Chinese company, UMC could be fined up to NT$25 million.

UMC, the world's No. 2 contract chipmaker, is suspected of illegally investing in, transferring technology to, or exchanging engineers with He Jian, based in Suzhou, eastern China. He Jian was founded in November 2001 with capital of US$350 million.

Investigators suspect UMC of having significant financial ties with He Jian, although the company has denied this.

"UMC and He Jian are two independent enterprises that have their own hiring procedures, and therefore UMC cannot assign any staff to positions at He Jian," UMC said in a statement issued late yesterday.

"Second, the UMC group did not invest or reinvest in the Chinese company, nor did it sell any equipment to He Jian," the statement said.

The statement also denied media reports that UMC transferred its technology and patents to He Jian. UMC said it would take legal action against any company, including He Jian, that infringes its patent rights.

Investigators said that after Hsu left UMC to become the head of He Jian, the Chinese company acquired 199 technology patents from UMC. In addition, over 50 of UMC's senior engineers left the country to work for He Jian in a short space of time.

Although the government issued conditional permission in 2002 for semiconductor manufacturing companies to invest in China, UMC never applied.

The government has previously warned UMC that it would be punished severely if it invests in China without approval.

Currently, UMC's rival Taiwan Semiconductor Manufacturing Co, the world's biggest contract chipmaker, is the only company to have received approval to build a plant in Shanghai.

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