UMC stocks fall as He Jian merger stalled, then terminated

United Microelectronics (UMC), the world’s second largest contract chipmaker, saw its shares fall as it was announced that the planned merger between and He Jian Technology has been postponed.

UMC had originally planned to raise its share in He Jian from 15 percent to 85 percent in April last year, with the support of stakeholders, as the firm attempted to increase its presence in China with a bid for $285 million in a half-cash, half- stock offer accepted.

Analyst Arch Shih told Focus Taiwan that he had expected that the deal would go through as UMC had shown a determination to expand globally.

“I am not surprised that selling in UMC has emerged today on such unfavourable news, particularly when market sentiment has turned weak amid worries over the high-tech sector’s outlook for the fourth quarter,” the TLG Asset Management analyst said.

It is believed that UMC and He Jian, the operators of an 8-inch fab in Suzhou with a capacity of 41,000 wafers, will now resume discussions for a new revised contract.

Shih believes that it is “just a matter of time” before a another deal is struck.

The Dow Jones Newswire on WSJ.com has just reported that Taiwanese regulations have effectively put a block on the merger which has been terminated for the near future. However, UMC says it still wants to integrate with He Jian some way, somehow.