UMC leads market lower

Taiwan stocks declined, led by United Microelectronics Corp (UMC, 聯電), on concern that it will find it more difficult to attract Japanese clients after the end of its chipmaking venture with Japan's Hitachi Ltd.

"UMC loses its high-end manufacturing base which would have helped convince Japanese companies such as Fujitsu Ltd and Toshiba Corp they have 300-millimeter technology,'' the most advanced available, said Ming Kai Cheng, an analyst at CLSA Ltd in Taiwan.

The TAIEX dropped 106.95, or 1.8 percent, to 5861.66, after earlier rising as much as 0.5 percent. Within the index, 282 stocks fell and 203 rose. The index has surged 70 percent since Oct. 3 when it fell to more than an 8 1/2-year low.

"There are valuation concerns if the market goes above 6,000 points because the market's PE (price earnings ratio) would be above 24 to 25 times forecast 2002 earnings," said James Liu, who manages NT$3.5 billion (US$100 million) in Taiwan stocks at ING CHB Securities Investment & Trust Co (喬治亞彰銀投信) in Taipei. "If the market is trading above 25 times 2002 estimated earnings I think it would be a good time to take profits." The total value of trade today was NT$119.6 billion (US$3.4 billion), down from NT$122.8 billion yesterday.

UMC fell NT$1.60, or 3.5 percent, to NT$44. Hitachi will take control of its year-old chipmaking venture in Japan from UMC, buying the Taiwan company's 40 percent stake for US$80 million to gain capacity to make chips using advanced technology.

Japan's third-largest chipmaker will acquire the stake in Trecenti Technologies Inc by April, spokesman Masanao Sato said.

The venture, which began business in March 2001, is located in Ibaraki, north of Tokyo.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the biggest made-to-order chipmaker, fell NT$2, or 2.3 percent, to NT$85.50. The stock has gained 94 percent since Oct. 3.

Eva Airways Corp (長榮) rose NT$0.85, or 6.9 percent, to NT$13.15. All Nippon Airways Co, Asia's second-biggest carrier, said it will jointly sell seats with EVA Airways on flights between Tokyo and Taipei after Tokyo's Narita international airport opens its second runway in April. All Nippon, which operates routes to Taiwan through its subsidiary Air Nippon Co, will fly seven times a week between Narita and Taipei, while EVA, Taiwan's No. 2 airline, will fly 14 times a week on the same route, All Nippon spokesman Fumiyoshi Fukumori said.