UMC Denies Merger Talks, But Taiwan Chipmaker's Shares Remain Strong

Despite Rejecting Merger Speculation, UMC Stock Continues to Climb, Highlighting Market Optimism

Taipei, April 1 - United Microelectronics Corp. (UMC), a prominent contract chipmaker based in Taiwan, has issued a denial regarding a recent report. The report, published by Nikkei Asia, suggested UMC was exploring a merger with U.S.-based GlobalFoundries Inc.

In a statement released on Tuesday, UMC stated that while it does not comment on market speculation, it is currently not pursuing any merger plans.

Despite the denial, UMC shares experienced a rise of 2.02 percent, reaching NT$45.55 (US$1.37) as of 12:04 p.m. on Tuesday on the Taiwan Stock Exchange. This occurred even as the Taiex, the market's weighted index, climbed 2.38 percent, despite concerns about potential tariffs from the United States.

On Monday, UMC shares displayed resilience, increasing by 0.22 percent, whereas the Taiex saw a decrease of 4.2 percent.

Following the Nikkei Asia report, UMC's American depositary receipts (ADRs) surged 9.16 percent overnight, surpassing the Philadelphia Semiconductor Index, which fell 0.34 percent.

The Nikkei Asia report suggested that a merger between UMC and GlobalFoundries could result in a larger U.S.-based company. This entity would possess extensive production facilities throughout Asia, the United States, and Europe.

The report also speculated that such a merger could provide the U.S. with greater access to mature chips, especially given escalating tensions across the Taiwan Strait.

Both UMC and GlobalFoundries specialize in the production of mature chips.

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

GlobalFoundries was ranked fifth, with a 4.6 percent share.

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

However, the combined entity would still be significantly behind Taiwan Semiconductor Manufacturing Co. (TSMC), which had a 67.1 percent market share in the fourth quarter. This dominance is due to high demand for high-end chips used in artificial intelligence applications and cloud services.

In 2024, UMC reported a net profit of NT$47.21 billion, a 22.6 percent decrease year-over-year. This decline was influenced by a global oversupply of mature chips. Earnings per share were reported at NT$3.80, compared to NT$4.93 the previous year.