UMC to be Taiwan's First to Buy into China's 300mm Wafer Fab

United Microelectronics Corp.'s (UMC) board of directors has approved buying into a 300mm wafer fab planned by the Xiamen Municipal Government and an electronics enterprise owned by the Fujian Provincial Government.

To submit the application to Taiwan's Ministry of Economic Affairs sometime around Nov. 9,  UMC will become Taiwan's first company to invest in China's 300mm wafer fab.

UMC, a major pure foundry supplier, will invest around US$1.35 billion in the factory over five years beginning 2015, with total investment estimated at US$6.2 billion. UMC will, through its sole foundry subsidiary in China Hejian Technology Co., Ltd., acquire a 30% stake initially and up to 50-60% in five years, with its chief finance officer and spokesman C.T. Liu saying UMC to hold six of the nine seats in the new chip company's board of directors  initially to become the major  decision maker. UMC will also license technologies and offer services to the new company.

According to UMC Chief Executive Officer P.W. Yen, the  acquisition allows the company to  seize business opportunity in the world's biggest market for semiconductors, that China still depends on foreign manufacturers for most of needed chips, whose value exceeds that of its oil imports.

UMC executives say the stake  provides its global customers optional source in China and allow filling of urgent orders in China.

The 300mm wafer fab will likely start production in 2015 to turn out chips for credit cards, telecommunications equipment, and China UnionPay credit cards using 40nm and 55nm process technologies initially, with maximum output of 50,000 wafers monthly.

Semiconductor Manufacturing International Corp. (SMIC) is China's No.1 homegrown 300mm wafer fab operator despite lagging  Taiwan's foundry suppliers five to six generations technologically.

China's advanced 300mm wafer fabs are mostly run by foreign chipmakers, including Intel, Samsung, and SK Hynix. Spasion of the United States also plans to construct a 300mm fab in China with a local chipmaker. (KL)