UMC Suspends Solar Energy Investments Amid Market Downturn

United Microelectronics Corp. (UMC) has decided to table its solar-energy investment plans until the business begins upturn trend, making it another foundry heavyweight after Taiwan Semiconductor Manufacturing Co. stepping back to the sideline of the industry to wait for recovery.

UMC's decision has sent shockwaves through the solar energy industry as it branched into this sector earlier than TSMC. So far, UMC, currently the world's No.2 pure-play silicon foundry, has put money into both traditional silicon crystalline solar cell and the synthetic thin-film solar cell industries. Also, it has opened solar businesses related to solar-power plant systems in mainland China.

According to UMC, it will table its solar-energy investment plans until market recovery comes back. However, the company said it has no plan to divest itself of the holdings in invested solar-energy ventures as TSMC has done.

So far, most of UMC's solar-energy subsidiaries have yet to swing to profitability. According to its financial statement for the first quarter of this year, UMC's new business operation registered a total loss of NT$262 million (US$8.7 million at US$1:NT$30). The operation is set up to deal with investments in green energy sectors, including LED and solar energy.

In the first quarter this year, UMC booked a loss of NT$104 million (US$3.4 million) from a 44.16% holding in NexPower Technology Corp., which was in deficit of NT$236 million (US$7.8 million) in the same quarter. Also a UMC-invested solar-energy venture, Topcell Solar International Co., Ltd. reported a loss of NT$337 million (US$11 million).

Industry executives estimated both NexPower and Topcell could hardly turn profitable this year in consideration of the lingering weakness of global solar-energy market.

However, a solar-cell retailer that UMC invested in Shandong Province of the mainland earned profits of NT$6.25 million (US$208,333) and a solar venture in the same province specializing in system integration raked in earnings of NT$396,000 (US$13,200) in the first quarter this year.

source & copyright: CENS