United Microelectronics Corp (UMC, 聯電), Taiwan’s second-largest contract chipmaker, is to set up a strategic partnership with IC packaging and testing services provider Chipbond Technology Corp (頎邦科技) through a share swap, the company said on Friday.

Aiming to acquire a 9.09 percent stake in Chipbond, the chipmaker said that shares would be swapped at a rate of one common UMC share for 0.87 common shares of Chipbond.

The deal would result in the IC packaging and testing firm holding a 0.62 percent stake in UMC, it said.

UMC would become Chipbond’s largest shareholder, it added.

The chipmaker said the two companies’ boards of directors have approved the deal, but did not disclose when the share swap is scheduled to be completed.

The agreement includes the issuance of 61.11 million new UMC shares, it said.

Those shares, as well as 16.08 million UMC shares held by its subsidiary Fortune Venture Capital Corp (宏誠創投), would be exchanged for 67.15 million newly issued Chipbond shares, it added.

Based on Chipbond’s closing price of NT$81.10 per share on the Taipei Exchange on Friday, which was up 2.4 percent, the share swap would be valued at about NT$5.45 billion (US$196.73 million).

Shares of UMC soared 9.38 percent to end at NT$70 in Taipei trading on Friday.

Describing UMC as one of the important upstream wafer foundry operators in Taiwan’s semiconductor industry, analysts said that the move showed the firm’s ambitions to integrate resources in the industry’s upstream and downstream segments.

The move follows bigger rival Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) inroads into the high-end IC packaging and testing market.

Unlike TSMC, which set up its own production lines, UMC is seeking to form partnerships with IC packaging and testing services suppliers, including an existing stake in King Yuan Electronics Co (京元電子).

Announcing the Chipbond deal at a news conference in Taipei on Friday, UMC chief financial officer Liu Chi-tung (劉啟東) said that his company is the first contract chipmaker in Taiwan to supply chips for producing driver ICs for use in flat panels, while Chipbond has become a leader in Taiwan’s IC packaging and testing services industry, specializing in flat panel drive ICs.

Under the partnership, the two companies are determined to work more closely in the drive IC sector and expedite the rollout of chips for flat panels, Liu said.

Chipbond had previously planned to launch a private placement, but the project was rejected during its annual general meeting earlier this year.

Analysts said the rejection’s silver lining is that it allowed Chipbond to forge ties with UMC, helping its management solidify its position.

Chipbond, which posted earnings per share of NT$5.61 last year, issued a cash dividend of NT$3.8 per share, with a payout ratio of 67.7 percent.

In the first half of this year, Chipbond posted earnings per share of NT$3.96, up 58.4 percent from a year earlier.

Analysts said that based on Chipbond’s improving bottom line, UMC might profit from large future cash dividends on its take in the firm.

Asked about the IC firm’s outlook, Chipbond chairman Wu Fei-jain (吳非艱) said that a supply shortage of drive ICs for flat panels is expected to continue through the end of next year.

Chipbond raised its product prices in the third quarter, the fourth consecutive quarterly raise, Wu said, adding that there was no immediate plan for a price increase in the fourth quarter.


 

●Origin：Taipei Times
●Link：https://www.taipeitimes.com/News/biz/archives/2021/09/06/2003763851