Taiwan Keeps Door to China Closed for Chip Maker UMC

From PC World: Taiwan will have to revise chip-industry regulations before United Microelectronics (UMC) can invest in China, an official said Friday.

UMC, the world's second-largest contract chip maker, announced a plan in April to pay US$285 million for an 85 percent stake in He Jian Technology, which was established by former UMC employees in China in late 2001. At the time of the announcement, UMC said it believed having a production base in China was key to increasing profitability and promoting growth at the company.

But old chip investment regulations in Taiwan will keep UMC out of China entirely for now.

Taiwan long ago enacted rules allowing only three Taiwanese chip plants in China that make chips from 8-inch wafers. More modern fabs make chips from 12-inch wafers and are moving toward 18-inch wafers.

All of those factories have been spoken for, therefore UMC will have to wait until regulations are changed before it can complete its purchase of He Jian, according to John Deng, vice minister of economic affairs in Taiwan, speaking at a news conference in Taipei.

"We're working with UMC now, but we have not given them permission yet," he said.

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