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If the acquisition was completed, UMC would have 100% of the mainland company, but the deal is still subject to approval from its shareholders' meeting on June 10, 2009 and Taiwan regulators.
Established in 2001, Hejian Tech mainly owns a 0.18-micron process semiconductor factory, which started mass production in March 2005 and is capable of putting out 41,000 pieces of 8-inch semiconductor a month presently. Enjoying human resource and technological assistance from the Taiwan company, the OEM was once regarded as a UMC arm away from Taipei authorities' regulation.
As early as 2002, Taipei just allowed local above-0.25-micron process manufacturers of 8-inch semiconductors to invest in the mainland after establishing 12-inch semiconductor factories in Taiwan. Besides, the greenlight would be bestowed to only three such companies before 2005.
Then, UMC suffered thorough inspection from Taiwan regulators in 2005. At the beginning of the following year, the UMC founder and current chairman Robert Tsao was forced to resign from his position.
However, Taipei authorities somewhat released their restrictions on such investments in 2007. And as the Three Direct Links go forth, industries in the two regions are deepening their cooperation.
Besides, the Taiwan semiconductor industry needs to take the mainland market as its growth engine in a financial storm, according to Mo Dakang, an analyst with Semiconductor Equipment and Materials International (SEMI) China, who expects that UMC would undoubtedly get Taiwan regulators' approval for the merger.
His opinion was partly supported by the UMC CEO Sun Shih-wei, who believes that the mainland's outstanding economy is stimulating the global semiconductor market, thus many customers hope for semiconductor production there.
But Mr. Mo anticipated that Taipei would not greenlight 12-inch semiconductor manufacturers' investments in the mainland in the near future, as the island's supreme economic regulatory department announced lately that Taiwan would not further open its semiconductor and LCD panel sectors to the mainland temporarily.
In addition, the mainland integrated circuit market generated sales of CNY 597.33 billion in 2008, up 6.2% from the previous year, compared to the annual growths of 40.2% 30.8%, 24.7%, and 18.6% in the four years ended 2007, respectively, according to the China Semiconductor Industry Association (CSIA). CSIA believes that the market has entered a steady period after years of fast growth.
(USD 1 = CNY 6.83)
Source: dycj.ynet.com (April 30, 2009)
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