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UMC increases stake at SIS
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Wednesday, January 22, 2003
United Microelectronics Corp. has increased its stake in Silicon Integrated Systems Corp. for $103.8 million, strengthening an alliance that has followed the settlement of a patent dispute between the companies.
UMC, the world's No.2 pure-play foundry service provider, said that it bought 14 million global deposit receipts (GDRs) issued by SiS late last week, boosting UMC's stake in Hsinchu-based SiS to nearly 15%.
Prior to this latest stock acquisition, the foundry had already accumulated in less than a month holdings of 5.3% in SiS and won three of seven seats on the SiS board. That came after UMC agreed to settle the lawsuit with SiS, which in turn is placing orders with UMC.
The GDR purchase "is intended as a long-term investment," Liu Chi-tung, UMC's investor relations chief, said in a statement.
Although Liu didn't elaborate on the investment, some analysts said UMC's move is part of a bigger plan to raise the company's exposure in the core logic chipset sector. UMC has also expressed interest in winning board seats in a unit recently established by ALi Corp., a smaller rival of SiS.
"The overall direction that UMC is taking is to claim as much share as possible in the core logic chipset market," said Barro Liao, a senior analyst at Prudential Securities Investment Trust & Co., Taipei. "By working with SiS and ALi, UMC would be able to achieve that goal."
UMC executives couldn't be reached for comments.
Eric Chen, special assistant to ALi's president, told EBN that "We're in talks with UMC about the possibility for them to buy shares of our unit, and even win some board seats in the unit." Details would be available during the middle of this year, Chen said. The unit, which hasn't yet been named, will mainly sell core logic chipsets designed by ALi.
SiS and Ali, Taipei, Taiwan, together hold about 30% of the market, while Via Technologies Inc. owns 30% and Intel Corp. holds the remaining, said the analyst. Taipei-based Via now uses foundry facilities of Taiwan Semiconductor Manufacturing Co. Ltd., the larger rival of UMC.
As for SiS, company chairman and president Samuel Liu told shareholders in a special meeting this month that no expansion will be made at its 200mm wafer plant, which SiS has operated since 2000. He didn't comment on speculations that SiS will sell the fab to UMC.
The high cost of running the facility, together with soft demand worldwide, contributed to SiS's losses in each of the last three years, some analysts said.
SiS will cancel the long-planned construction of a 300mm wafer facility in Taiwan amid the partnership with UMC, said the chairman.
By: DocMemory
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