Fri, Feb 18, 2005 - Page 2 News List

Chipmaker's stock falls 4.3 percent

STAFF WRITER , WITH BLOOMBERG

The Hsinchu prosecutors' office late last night denied rumors that United Microelectronics Corp (UMC) vice chairman John Hsuan (宣明智) was barred from leaving the country.

UMC's shares fell yesterday as prosecutors further probed the chipmaker's alleged unauthorized ties to a Chinese company. UMC's stock fell 4.3 percent to NT$19.90, the biggest decline in almost six months. The stock had earlier slid as much as 7 percent.

The investigation "will hurt market sentiment," said Victor Shih, who manages US$220 million, including UMC shares, at Taiwan Fund Inc in Taipei. He said investors may prefer Taiwan Semiconductor Manufacturing Co (TSMC) "because of its better corporate governance."

The government has restricted chipmakers' investment in China on concern the country would take jobs and possibly steal advanced technology. China will experience double-digit growth in demand for chips until 2010, compared with between 5 percent and 11 percent for the rest of the world, a PricewaterhouseCoopers LLP report said this month.

UMC has no direct investments in China, company spokesman Alex Hinnawi said yesterday.

Standard & Poor's said that its BBB+ rating on UMC isn't immediately affected by the investigation because of the company's finances. The ratings company said UMC could face a maximum fine of NT$25 million (US$792,000) if it is found to have violated the regulations on investment in China.

"The impact on the share price will be limited," said Irene Yin, who counts UMC stock among the equivalent of US$697 million she helps manage for Prudential Financial Securities Investment Trust in Taipei.

The stock will probably fall to about NT$19 in the next few days before rebounding, she said.

UMC chief executive Jackson Hu (胡國強) in November 2003 said the company might give some business to He Jian, a Chinese chipmaker with which it had a "friendly" relationship. UMC had no profit-sharing relationship with He Jian, he said at the time.

UMC said in 2003 that about 100 ex-employees had joined He Jian, based in Suzhou, near Shanghai.

Some UMC customers have shifted orders to He Jian and invested in the Chinese chipmaker. Xilinx Inc, the world's biggest maker of programmable semiconductors, said last July that it increased investments in He Jian and planned to start making chips for the first time in China within six to nine months. Xilinx declined to disclose the size of the stake.

The decision to shift some production to China wouldn't hurt Xilinx's partnership with UMC, Willem Roelandts, chief executive of the San Jose, California company told reporters in Shanghai at the time.

Xilinx as of November 2003 was the third-largest shareholder in UMC, with a 2.227 percent stake, based on corporate filings from the US company.

This story has been viewed 3765 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top