UMC Group Announces Consolidation of Joint Ventures and Acceleration of Foundry Capacity Expansion
SUNNYVALE, Calif. and TAIPEI, Taiwan--(BUSINESS WIRE)-- June 14, 1999--
Company Set for Exponential Growth: Will Further Address
Industry's Need for More Capacity
In an extraordinary session today, the respective boards of the Taiwan companies in the UMC Group unanimously approved merging three joint-venture companies and one publicly-traded entity into the United Microelectronic Corporation (UMC). Today's board action is the beginning of the formal process in which United Semiconductor Corporation (USC), United Integrated Circuits Corporation (UICC), United Silicon Incorporated (USIC) and UTEK Semiconductor Corporation (UTEK) (Taiwan Stock Exchange:2339), will be merged into United Microelectronics Corporation (UMC) (Taiwan Stock Exchange:2303).
Bob Tsao, Chairman of UMC Group, stated, ''This reorganization focuses our Taiwan-based fabs into a single, more financially-efficient and competitive organization, casting the die to be the largest, most profitable, and most technologically advanced pure-play foundry in the world.''
The corporate status of Nippon Foundry Incorporated (NFI) (NFI 6939 JP), the newest joint-venture member of UMC Group and the first pure-play foundry in Japan, is unchanged by the reorganization, i.e., it retains its status as a member of UMC Group and as a publicly-traded company in Japan.
This reorganization will enable the UMC Group to accelerate capacity-expansion plans forward by approximately 12 months, maintaining a growth rate of 45 percent per year in both 1999 and 2000, the highest rate of capacity expansion in the foundry industry. This expansion will be funded in those years with an annual capital expenditure of $1.3B US, the largest in the foundry industry. This will also bring UMC Group's total capacity to more than 2.4M 8-inch equivalent wafers in the year 2000. Fifty percent of this capacity will be comprised of 0.25/0.18 micron capacity.
John Hsuan, CEO of UMC Group explained, ''Analysts are forecasting a reversal in the supply-demand balance for 0.25 micron foundry wafers in 2000, and that supply will get progressively tighter in 2001. We are already seeing this trend emerging in bookings for second half 1999 at UMC Group. With this merger, we will better meet market trends and customer needs.''
Along with capacity expansion, this change will also accelerate the foundry process technology rollout for 0.15 and 0.13 micron technologies. The Group foresees it will continue to be first in foundry production with the most leading-edge technologies, as it was for both 0.25 and 0.18 micron.
With efficiency gains in financial management and technology development, it is foreseen that sales and customer service will be similarly strengthened, and evermore responsive to customer needs and market trends. Jim Kupec, President of UMC Group (USA) commented, ''Capacity is the key question on customers' minds that this merger addresses, but moreover, we are convinced this combination will allow us to offer even more seamless and competitive service to our customers in the U.S. and worldwide.''
The three affected joint ventures (USC, UICC, USIC) are privately-held companies. Their shareholders will realize a rapid path to liquidity via this merger as they, along with the UTEK shareholders, become shareholders of publicly-traded UMC. A substantial investment return multiple is anticipated by all joint venture investors.
Consolidated revenues for the Group are anticipated to remain on plan for 1999 at $1.6B USD, up from $1.1B USD in 1998, a 45 percent increase, by far the biggest in the foundry industry. The financial position of the Group is exceptionally strong, with cash assets of $1.6B USD; and the UMC Group is thus well positioned to execute the unprecedented capacity-expansion plans described above.
UMC has a tradition of flexibility and quick decision-making to meet the demands of the rapidly changing landscape of the high-technology world. The decision to abandon its position as Taiwan's leading integrated device manufacturer to become a dedicated wafer foundry was made in May of 1995. By September of the same year, UMC had announced the formation of three joint venture wafer foundry companies (USC, UICC, and USIC). UTEK was added to the UMC Group in 1998, and NFI followed several months later. The current decision to merge the 5 Taiwan-based UMC Group foundries into one flagship company, UMC, was carried out within a similarly condensed period. This rapid decision making has proven to be a significant competitive advantage for UMC throughout its history.
biz.yahoo.com |
