UMC Shifting Strategy

Last week in Jackson Hu Takes a Step Back at UMC we mentioned the executive team at UMC is changing. The change in the executive team seems to have brought about a change in the companies strategy. According to Digitimes UMC will start to focus more on the bottom line and less on their affiliated IC design companies.

With Taiwan foundry United Microelectronics Corporation (UMC) recently restructuring its executive team by announcing that Stan Hung has been elected to the position of UMC chairman and Dr. Shih-Wei Sun has been appointed CEO, market watchers noted that they also have confidence that IC design houses with UMC investment will also benefit in terms of their sales and stock price. However, comments from sources at a number of those UMC affiliated IC design houses appear to show that this confidence is not shared with the group.

UMC has investments in a number of IC design houses, including Integrated Technology Express (ITE), NexPower Technology and Faraday Technology, among others.

Hung has served as UMC's CFO, and previous to his appointment to chairman, he was senior vice president at UMC. He was also chairman of NexPower Technology and Integrated Technology Express (ITE). However, market watchers are predicting that Hung may resign his chairmanships of those two companies. The sources pointed out that the future directions for these companies is up in the air.

Change in management at any company usually brings about change in strategy. It seems this is true for UMC too. How will the affiliated design houses fare? Its hard to say right now. ITE for example has had a rough ride on the stock market over the past year. After rising from NTD60 to NTD180 per share, it recently dropped down to NTD68 per share and yesterday was sitting at NTD89! Talk about volatility!

As for UMC, well their stock price is in the gutter and has been for a while. Yesterday UMC shares traded at NTD15.7 per share, the lowest since before 2003. Certainly a change in strategy seems to be in order!

Digitimes: New UMC CEO said to focus on bottom line, not affiliated IC design houses