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September 17, 1998

UNITED MICRO HALTS TAIWAN CHIP PLANT INVESTMENT

By CBR Staff Writer

United Microelectronics, the Taiwanese chipmaker, is the latest firm to halt its investments in wafer fabrication plants due to the current industry downturn. Last year, United said it had committed $500bn Taiwanese (now worth around $15bn US) in a series of six plants over the following ten years, predicting that they would be churning out over one million eight inch and 12-inch wafers by 2007 (CI No 3,186). We have decided to put the project on hold for the time being John Hsuan, United Micro’s co-chief told Reuters on Thursday. Even at the time, the investment seemed huge amidst warnings about oversupply. Taiwan Semiconductor Manufacturing Corp and others in Taiwan announced similarly ambitious plans at the same time last year, in a move that some observers interpreted as politically motivated. Something like $55bn was committed on projects vague enough not to be seriously binding that nevertheless showcased the government’s efforts to expand the Taiwanese economy. Taiwan Semiconductor said it would be reducing its spending on plants back in July (CI No 3,454). United says it expects the market to recover in around a year and a half, and may buy capacity from Europe, Japan or the US to tide it over – there are plenty for it to choose from.

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