UMC Seeking Strategic Partner via Private Share Placement

Taipei, May 6, 2010 (CENS)--United Microelectronics Corp. (UMC), Taiwan's second largest contract IC maker, announced a capital increment plan in the form of private share placement yesterday (May 5), which company spokesman Liu Chi-tung said is mainly for the solicitation of strategic partner.

Industry insiders noted that UMC may target to team up with such industry players as TI, ASML, and Global Foundries (GF), in order to strengthen its competiveness and catch up with Taiwan Semiconductor Manufacturing Co. (TSMC), the world's leading foundry.

The company's board of directors resolved yesterday to issue 1.298 billion new shares, 10% of its total shares in circulation, via private placement, which will enable it to raise NT$19 billion of fresh fund, according to its closing share price yesterday. This is the first private share placement of the company in its 30-year history.

Liu Chi-tung admitted that the resolution is in preparation for seeking strategic partner, adding, though, that the company neither has had a list of targeted partners nor talked with any potential partner up to now. He said that the plan is a long-term one, which may not necessarily be executed.

Fund raising appears not the primary goal of the project, as the company doesn't lack fund. It possessed NT$45 billion of cash equivalent as of the end of the first quarter, more than enough for the projected capital outlay of US$1.2-1.5 billion this year. In addition, the company's debt ratio is less than 10%.

The plan coincides with the completion of the third- and fourth-stage capacities of its 12-inch wafer plant in Southern Taiwan Science Park, scheduled on May 20.

Insiders believe that the plan is designed to reverse the company's lagged development in cutting-edge technology in recent years, in comparison with TSMC and even the latecomer Global Foundries.

The company's share price plunged over 6%, closing at NT$14.7 per share yesterday, when the Taiex price index shed 223.87 points to 7696.9, as investors sold off stocks amid the jittery market, triggered by the credit crisis of Greece.