UMC pulls out of chip venture with Hitachi

Contract chipmaker United Microelectronics (UMC), has decided to sell off its stake in a chipmaking venture with Hitachi after...

Contract chipmaker United Microelectronics (UMC), has decided to sell off its stake in a chipmaking venture with Hitachi after failing to take control of the joint-venture company.

Hitachi has pledged to buy UMC's 40% stake in Trecenti Technologies for ¥10.7bn (£56m). After the purchase, Trecenti will become a wholly owned subsidiary of Hitachi, said Masanao Sato, a spokesman for Hitachi. Trecenti operates a 300mm wafer fabrication plant in Japan.

The companies said the decision to end the joint venture came as a result of the semiconductor industry downturn and a need to focus efforts on their respective semiconductor operations. "The major issue was that the urgency for the fab was not as high due to the fact that there has been an industry downturn," said UMC spokesman Alex Hinnawi.

With a wholly owned 300mm fabrication plant in operation in Taiwan and plans to build another one in Singapore through a joint venture with AMD, UMC felt its joint venture with Hitachi could place a drain on technical resources that would be needed elsewhere. "We have limited amounts of resources in technology development and engineering and we really need to focus those on the wholly managed 300mm facilities," Hinnawi said.

Despite the decision to sell its stake in Trecenti, UMC had recently made a bid to take over control at the fabrication plant. UMC Chairman Robert Tsao made public his desire to see UMC take control at Trecenti, saying the company wanted management control of the plant or it would sell its shares in the joint venture back to Hitachi.

"There might be an issue of the competitors of Hitachi not wanting to go to that fab because they perceive it as not being completely independent," Hinnawi said. Though, he added, he had not heard of a specific case where this had been a problem.

Trecenti operates a single semiconductor fabrication plant at Hitachi's large-scale integrated circuit (LSI) facility north of Tokyo. The plant is one of Japan's most advanced and was the first in the country to handle semiconductor wafers of 300mm in diameter.

Most semiconductor production is now done with wafers that are 200mm in diameter, although a gradual shift towards the larger-size wafers is underway because a single 300mm wafer can yield around twice as many chips.

Hitachi said that once the buyout is complete, the Ibaraki plant will join facilities in Japan and Singapore as centres for the production of system LSI chips, flash memories and SRAMs. Employees sent to Trecenti from UMC will return to the company while those from Hitachi will remain with Trecenti.

Read more on IT jobs and recruitment