SAN JOSE, Calif. In a stunning and revealing letter to shareholders, Robert Tsao on Thursday (Dec. 29) announced that he plans to resign from his positions as chairman and board member of Taiwanese foundry specialist United Microelectronics Corp. (UMC).
Jackson Hu, UMC’s chief executive, will assume the duties as chairman, according to embattled Tsao in the letter. (See letter to shareholders below)
The move follows a series of snafus at UMC (Hsinchu). In particular, Tsao has been the center of attention in UMC’s recent move to restate its results and a controversial investment in a Chinese foundry provider.
Tsao reportedly said Wednesday (Dec. 29) he is considering delisting the contract chipmaker from the Taiwan Stock Exchange after being penalized for delaying disclosures.
According to an Associated Press report, Tsao stated in open letter to shareholders published in major daily newspapers the Financial Supervisory Commission's decision on Dec. 15 to fine the company $1,500 was "unreasonable."
The Taiwan Stock Exchange imposed the fine on UMC because its disclosure on the SEC earnings restatement wasn't posted on the Taiwan Stock Exchange's Web site until Dec. 14, after the local bourse began trading for the session. On Dec. 13, UMC that it would restate its earnings under U.S. Generally Accepted Accounting Principles for 2002, 2003 and 2004.
Then, in June, Tsao said that he would resign in 2007 and recommended Hu take over the position. The move came as Tsao faced increasing pressure from a criminal investigation into allegedly illegal investment by UMC in Chinese foundry He Jian Technology Corp.
Tsao was questioned, but no charges were filed against him. UMC demanded that either charges are brought against its chairman or the entire matter dismissed.
On Thursday, the UMC chairman issued the following letter to shareholders:
With regard to the recent financial filing incident, UMC has acted in complete compliance with international standards, and has done nothing illegal or made any oversights. Unfortunately, the filing process, carried out with complete professionalism and fully in accordance with global practices, has been greeted in Taiwan by distortion and political manipulation, with total disregard for right or wrong. I am shocked and surprised by the manner in which the facts have been distorted.
In order to avoid political pressure and in the interest of UMC shareholders, I had previously offered my resignation to the board of directors at the outset of the controversy related to Hejian. My decision was met with strong opposition by the board. With the recent controversy regarding the filing of UMC's financial statements, I have again decided to offer my resignation at next year's March board meeting. This time the decision is final. Before I leave my position, I will endeavor to insure a smooth leadership transition, and I am extremely confident that the operations of the company will continue unaffected.
After I have resigned from my position as chairman, I hope that all external criticism or pressure being exerted by certain authorities can be focused on me as an individual, and not on the company, shareholders or innocent employees within the company. UMC and its employees are an important national asset, and the unwarranted pressure currently being exerted on UMC is the nation's loss, and against the best interests of nearly one million shareholders in Taiwan. In its most recent statements, the Financial Supervisory Commission has resorted to accusing UMC employees of insider trading, and I hope that this reckless behavior will end with my resignation before it causes excessive damage to the credibility of the government.
In order to show my support for UMC's shareholders, I assure you that I will not sell any of my UMC shares for at least two years after my resignation. I remain optimistic about the future prospects for UMC and the foundry industry as a whole. I also believe that UMC's CEO Jackson Hu is well prepared to take over my duties as chairman, and that UMC shares are an excellent long-term investment.
Finally, I would like to thank all of UMC's shareholders for your support of the company over the years. In the near future, I will join your ranks as a loyal individual shareholder, and continue to share your love and support for UMC. Thank you.
Robert Tsao, chairman