United Microelectronics, Taiwan's second-largest chipmaker, said Thursday it decided to postpone a T$500 billion (US$14.5 billion) investment plan due to the worldwide glut in computer chips.
"We have decided to put the ... Tainan project on hold for the time being," said John Hsuan, co-chief executive officer of United Micro.
In June 1997, United Micro said it would invest T$500 billion over 10 years to build several 12-inch wafer-fabrication plants at the Tainan science industrial park in southern Taiwan.
It would have been the island's single biggest industrial project.
But United Micro said Thursday that current industry conditions did not justify the ambitious plan.
"The whole semiconductor industry is under very serious oversupply pressure," Hsuan said. "I see no reason to justify why people should invest in 12-inch fabs now."
Analysts were not surprised.
"The company is making a right decision," said Oliver Fang, institutional sales chief for National Securities. "It would be extremely unrealistic for the company to continue its planned investment plan. The timing is simply not right."
United Micro is one of the world's leading makers of made-to-order semiconductors, a specialty known as foundry chipmaking.
In Taiwan, it is second in production value only to microchip powerhouse Taiwan Semiconductor Manufacturing.
United Micro's US division president, James Kupec, said it would take at least a year for the industry to recover. But before that, Kupec said he expects to see 10-percent price erosion in the first half of 1999.
Copyright © 1998 Reuters Limited.
