UMC to shutter Japanese fab

UMC to shutter Japanese fab

SAN FRANCISCO—Taiwanese foundry United Microelectronics Corp. (UMC) said Tuesday (Aug. 21) its board of directors voted to close the company's 200-mm fab in Japan in an effort to cut costs amid difficult macroeconomic conditions and customer demand decline.

"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," UMC (Hsinchu, Taiwan) said in a regulatory filing with the Taiwan Stock Exchange. "In line with this trend, [UMC Japan] will be shut down to enable UMC to integrate business, improve resource use efficiency and lower operating costs as UMCJ was unable to effectively reduce costs and reach performance targets."

UMC said it would suspend operations at the fab, located in Tateyama City in Japan's Chiba prefecture, after completing manufacture of its final orders. The company said it plans to dissolve the subsidiary and liquidate its assets at a future time.

UMC Japan was acquired by UMC from Nippon Steel Semiconductor Corp. UMC originally bought a majority of Nippon Steel Semiconductor in 1998. The Taiwanese foundry acquired the remaining stake in the fab, since renamed UMC Japan, in 2009.

UMC said it would continue to serve customers in Japan through its other fabs, nearly all of which are in Taiwan.

UMC said the UMC Japan fab has a monthly capacity of approximately 20,000 200-mm wafers. Until June 30, total assets for the subsidiary were 16.8 billion yen (about $212.2 million) with liabilities of 2.8 billion yen (about $34.4 million), UMC said.

The subsidiary had first half operating revenue of 3.7 billion yen (about $46.8 million) and a net loss of 1.6 billion yen (about $20.2 million), UMC said.

UMC said last month it would sell up to 10 percent of the company to a strategic partner or partners. UMC, long the No. 2 player in the semiconductor foundry business behind rival Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), is expected to slip to third in foundry sales this year behind TSMC and Globalfoundries Inc., according to IC Insights Inc.

TAG:UMC Foundry Japan Subsidiary Fab