UMC Group Consolidates JVs

-- Semiconductor International, 8/1/1999

The respective boards of the Taiwan companies in the UMC Group approved merging three joint-venture companies and one publicly traded entity into United Microelectronic Corp. (UMC). The new firm will be formed by merging United Semiconductor Corp. (USC), United Integrated Circuits Corp. (UICC), United Silicon Inc.d (USIC) and UTEK Semiconductor Corp. (UTEK).

The corporate status of Nippon Foundry Inc. (NFI), the newest joint-venture member of UMC Group and the first pure-play foundry in Japan, is unchanged by the move. It retains its status as a member of UMC Group and as a publicly traded company in Japan.

This change is expected to accelerate the group's foundry process technology rollout for 150 nm (0.15 mm) and 130 nm (0.13 mm) technologies.

UMC has agreed to pay S3 Inc. (Santa Clara, Calif.) $42 M to license 29 patents covering multimedia products and integrated circuit manufacturing technology for use in products to be manufactured by the UMC Group. S3 also is to release UMC from contingencies associated with a previous sale of United Semiconductor Corporation (USC) stock by S3. UMC is the major shareholder in USC, a foundry joint venture formed by UMC, S3 and Alliance Semiconductor in 1995.

An equity position held by Xilinx (San Jose, Calif.) in United Silicon Inc. (USIC) will be converted into shares of UMC. Xilinx is expected to receive about 220 million shares of UMC stock, or a 2 percent ownership of the combined UMC Group.

Alliance Semiconductor will receive 247.7 million shares of UMC stock for its 14.76% ownership of USC and about 35.6 million shares of UMC stock for its 3.2% ownership of USIC. Alliance also is entitled to receive a payment of about $20 M within 60 days after completing the merger in connection with the previously reported sale of 35 million shares of USC stock in March 1998.