UMC launches share buyback after U.S. indictment

2018/11/06 16:25:13 fontsize-small fontsize-default fontsize-big
UMC launches share buyback after U.S. indictment

Taipei, Nov. 6 (CNA) United Microelectronics Corp. (UMC) launched a share buyback program Tuesday in a bid to prop up its share prices after they plunged the previous day due to an indictment of the company by the U.S. Department of Justice.

Under the share repurchase plan, UMC, the second largest contract chipmaker in Taiwan, said, it will buy up to 300 million shares on the open market at between NT$7.55 (US$0.25) and NT$20.8 per share from Nov. 6 to Jan. 5, 2019.

UMC said it will stick with the share buyback program even if its share price falls below the range it has set.

The buyback decision was approved Monday at a UMC board meeting after the company's shares plunged by the daily maximum 10 percent Monday to close at NT$10.75 on the Taiwan Stock Exchange, which ended 0.17 percent lower.

Based on Monday's closing price, the share buyback program is expected to cost UMC about NT$3.23 billion.

With the launch of the program on Tuesday, UMC shares rebounded to close 1.40 percent higher at NT$10.90, with 209.05 million shares changing hands on the main board, while the broader market fell 0.66 percent.

Last Thursday, the U.S. Justice Department said it had indicted UMC, China's state-owned Fujian Jinhua Integrated Circuit Co., Ltd. and three individuals on charges of conspiring to steal business secrets from U.S.-based dynamic random access memory chipmaker Micron Technology Inc.

The day after the indictment was publicized, UMC shares fell 0.42 percent, but in the next session on Monday the stock came under greater pressure amid international media reports that the company could face forfeiture and a maximum fine of more than US$20 billion, if convicted of the charges.

The company's latest buyback program is its third in three years, the other two having been carried out May-June 2016 and March-May 2018, with UMC buying back all 400 million shares it had previously planned to buy.

In a statement Friday, UMC said the charges in the U.S. Department of Justice's indictment were "virtually the same as the allegations in a civil complaint previously filed by Micron against UMC," and the company vowed to do everything it could to clear its name.

In December 2017, Micron filed a civil lawsuit against UMC and Fujian Jinhua with a federal court in California, accusing them of intellectual property rights infringements related to Micron DRAM chips, after prosecutors in Taiwan charged two Micron employees with stealing trade secrets, according to a Reuters report.

(By Chang Chien-chung and Frances Huang)
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