News & Analysis
Taiwan authorities to question UMC over foundry flap
2/17/2005 2:07 PM EST
Robert Tsao, chairman of silicon foundry provider UMC (Hsinchu, Taiwan), may also be questioned, "following an appeal to a court to bar a senior executive and a former executive of the company from going abroad," according to the report.
Authorities also found links between UMC and the Chinese foundry provider, according to the report from the Web site. Reports also surfaced that the top executive of Hejian has been detained over the flap.
As reported, the Ministry of Justice raided the offices of UMC on Tuesday (Feb. 15), looking for information that might prove the company illegally invested in Chinese foundry Hejian. UMC officials denied it has invested in the company despite having many of the same foundry customers.
Although Hejian started operations just two years ago, and only has capacity for processing about 30,000 wafers a month using 0.15-micron to 0.50-micron manufacturing technology, the company has said it will invest more than $10 billion over the next 10 years to become China's largest foundry (see Feb. 16 story).
According to the news report, the Ministry of Justice raided UMC's offices and residences of vice chairman John Husan and a departed executive.
"The ministry's officials reported they had seized information proving Hejian was a UMC affiliate, not simply a 'UMC's friendly partner in the mainland,' a term UMC had long used when being questioned about its relationship with Heijan," according to the report. "Based on the findings, the ministry already put J.H. Hsu, a former UMC executive before opening Hejian in the mainland, under custody for further legal investigations and appealed for a court ruling to prohibit the two suspected from going abroad."
Hsu is apparently the chief executive of Hejian. If UMC had invested in the Chinese company without Taiwan government permission, it "will be charged with fraudulence according to Taiwan's Criminal Law, not just a misconduct violating the island's Civilian Law," according to the report.
"The Ministry of Economics Affairs (MOEA), which reviews all of the island's offshore investment applications, pointed out that if the charge stands, UMC will be obligated to retreat its capital from Hejian in a certain period of time and pay a fine as high as NT$25 million ($780,000). If it fails to complete the capital retreat in the given time, its decision-making officers will face a conviction of two years in prison," according to the report.
The Taiwan government is "looking into whether UMC has allowed Heijan to use 199 of its patented technologies and if the two companies have any capital and personnel linkages. In an interrogation, Hsu confessed 80 of his company's specialists including some managers came from UMC, but he stressed they were not on loan from UMC. Also, Hsu said his company paid UMC for old equipment, not acquiring them without any charge," the report said.
