UMC Bought Up 1.13% of Tatung Shares

Taipei, May 25, 2006 (CENS)--United Microelectronics Corp. (UMC) announced on May 24 that its 100%-owned subsidiary, Hungting Venture Capital, has bought up 47,500,000 shares of Tatung Co., or 1.13% of the company' s total shares, a move triggering speculation in the market that UMC may attempt to get involved in the management of Tatung, in view of the absence of business links between UMC and Tatung at present.

Robert Tsao, honorary chairman of UMC and chairman of Hungting, though, denied the allegation, saying that the share purchase is purely out of the purpose of wealth management. With interest rates remaining at a low level, Hungting purchased Tatung shares in order to boost its investment returns, according to Tsao.

Lin Wei-shan, chairman of Tatung, revealed yesterday that Tatung and UMC will expand cooperation. In addition to the purchase of PC chipsets of Silicon Integrated System (SiS), a subsidiary of UMC, by Tatung, in the future Tatung may also purchase from UMC group drive Ics for LCD (liquid crystal display) TV, plasma TV, and other audio-visual products, as well as chipsets for handsets.

Lin pointed out that during the preparation for the establishment of Green Energy Co., a subsidiary of Tatung for the production of solar energy chipsets, several years ago, UMC contacted Tatung for investment in the company. Although Green Energy has yet to release shares of UMC, the chance for cooperation exists, according to Lin. Insiders noted that waste wafers of UMC in its production process can still be used as upstream multi-silicon wafers for Green Energy for the production of solar cells.

UMC announced yesterday that over the past three days, Hungting had spent NT$583 million to purchase 47,400,000 shares of Tatung at an average price of NT$12.31 per share. Share price of Tatung jumped at the daily limit of 7% to NT$12.85 yesterday.

Tatung boasts realty assets of 450,000 pings, worth some NT$100 billion, making it a property stock which is now in vogue.

With capital of NT$3 billion, Hungting has made a number of major investments since last year, including the purchase of 8% of shares of Rechi Precision, a producer of compressor for air conditioning system, as well as investments in the fields of variation-frequency chip, LED (light emitting diode), and battery.