UMC to close semiconductor foundry in Japan, dissolve subsidiary

August 22, 2012 — United Microelectronics Corporation (NYSE:UMC; TWSE:2303), global semiconductor foundry, will close its foundry operation in Japan through the dissolution and liquidation of its wholly-owned subsidiary, UMC Japan (UMCJ).

UMCJ has a capital of $81,000,000 yen. Its foundry operation consists of an 8” fab with a monthly capacity of approximately 20,000 wafers. Until June 30, 2012, total assets for UMC Japan were $16.8 billion yen, total liabilities were $2.8 billion yen. For the period, UMCJ’s operating revenue was $3.7 billion yen, which resulted in a realized net loss of $1.6 billion yen. UMCJ was unable to effectively reduce costs and reach performance targets, UMC says.

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UMC expects to integrate its manufacturing resources and reduce operating costs by dissolving its semiconductor operations in Japan. Owing to macroeconomic conditions, the industry’s fast-changing environment, customer demand decline and continued unstable energy supply caused by Japan’s 2011 earthquake, semiconductor vendors upstream and downstream have either reduced or eliminated capacity in Japan to save costs, the company said.

This year, UMC is ranked #3 of the top 12 foundries in the world, by IC Insights. In 2011, it was ranked #2.

UMC took control of Nippon Steel Semiconductor Corporation following partial ownership transfer in 1998. The facility was later renamed “UMC Japan” in 2001 to better reflect its position as a UMC group member. In 2009, UMC proposed a tender offer to fully acquire UMCJ’s outstanding shares. After its integration as a wholly owned UMC subsidiary, UMCJ formally delisted from JASDAQ.
Now, UMC will serve Japanese customers through a global customer service logistics network, and capacity from manufacturing locations in Taiwan and Singapore.

The non-operating impairment charge from business liquidation will be publicly announced in accordance with regulations as the proceedings progress. UMC will also dispose of other non-core holding assets at the appropriate time to reduce the impact on the current period’s profit and loss.

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