UMC denies merger report; shares extend gains

Taipei, April 1 (CNA) United Microelectronics Corp. (UMC), the second largest contract chipmaker in Taiwan, has denied any pursuit of a merger after Nikkei Asia reported Monday that it was exploring a merger with U.S.-headquartered counterpart GlobalFoundries Inc.

In a statement Tuesday, UMC said it does not comment on market speculation but added that it was not currently pursuing any merger plans.

Even with the denial, UMC shares had risen 2.02 percent to NT$45.55 (US$1.37) as of 12:04 p.m. Tuesday on the Taiwan Stock Exchange, where the Taiex, the market's weighted index, was up 2.38 percent despite worries over potential tariffs to be imposed by the United States.

On Monday, UMC shares appeared resilient, rising 0.22 percent while the Taiex fell 4.2 percent.

Due to the Nikkei Asia report, UMC's American depositary receipts (ADRs) soared 9.16 percent overnight, outperforming the Philadelphia Semiconductor Index, which fell 0.34 percent.

In reporting that UMC and GlobalFoundries were exploring a merger, Nikkei Asia said they were likely to create a bigger U.S.-based company that will have broad production footprints across Asia, the United States and Europe.

The report said the merger is expected to help the U.S. gain access to mature chips amid escalating tensions across the Taiwan Strait.

Both UMC and GlobalFoundries specialize in mature chip production.

According to Taipei-based market information advisory firm TrendForce Corp. UMC had a 4.7 percent share of the global pure play wafer foundry market in the fourth quarter of 2024, ranking fourth in the world.

GlobalFoundries ranked fifth with a 4.6 percent share.

If the two companies were to merge, their combined market share of 9.3 percent would top the respective 8.1 percent and 5.5 percent shares of second-ranked Samsung Electronics Co and third-ranked Semiconductor Manufacturing International Corp. (SMIC).

The new entity, however, would still lag far behind Taiwan Semiconductor Manufacturing Co. (TSMC), which had a 67.1 percent share in the fourth quarter due to strong demand for high-end chips used in artificial intelligence applications and cloud services.

In 2024, UMC posted a net profit of NT$47.21 billion, down 22.6 percent from a year earlier on a global supply glut in mature chips, with earnings per share at NT$3.80 compared with NT$4.93 a year earlier.