UMC completes Silterra stress test

6 Ramadhan 1434

TAIWAN’S United Microelectronics Corp (UMC), the world’s No. 3 contract chipmaker, has completed a stress test on Silterra Malaysia Sdn Bhd, people familiar with the matter said yesterday.

It is understood that two other potential buyers from China are waiting in the wings to take over the Malaysian chipmaker in the event the UMC deal does not go through.

Silterra, the country’s first chip fabrication company, is 98 per cent-owned by government investment holding arm Khazanah Nasional Bhd.

Business Times understands that UMC has completed due diligence on Silterra, raising expectations in the marketplace that Khazanah may off-load the chipmaker.

Khazanah has sold 55 assets worth RM35.7 billion from 2004 until last year. Chief among its sale of strategically important companies are Proton Holdings Bhd and Pos Malaysia Bhd.

Silterra, which lists itself as a project of national interest, has failed to meet profit targets as well as a listing on the New York-based Nasdaq in the second quarter of 2002.

Outside Malaysia, Silterra is highly regarded with the company being ranked No. 15 (based on revenue) in the global ranking ofleading pure-play foundries.

Silterra serves the mature tech segment of the market, valued globally at US$30 billion (RM97.25 billion) per year.

This has helped Silterra rake in profits of about RM50 million a year over the past five years, though legacy issues have capped its potential.

Silterra had cumulative losses totalling RM7.3 billion for 10 years up to 2011, putting pressure on its stakeholders to pump in more capital into the company.

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