Taiwan’s microchip giant United Microelectronics Corp. (UMC) said Friday it has ended a planned merger with China’s He Jian Technology because of regulatory restrictions. UMC’s board of directors made the decision to terminate an agreement with He Jian’s holding company, Infoshine Technology Limited, during a meeting on Thursday, it said in a statement. The merger would have involved a combination of common shares, American Depositary Receipts (ADRs) and cash as options for payment to He Jian’s shareholders, it said. However, new regulations in Taiwan precluded issuing common shares or ADR as payment options, according to the statement. “UMC will continue seeking possible alternatives with He Jian shareholders, including a full or partial acquisition of He Jian in cash upon revaluation,” the statement said. UMC obtained 15 percent of He Jian in a 2005 deal valued at NT$3.5 billion (US$110 million), which analysts believe was mostly paid in kind via a continuous transfer of valuable technologies. The island’s authorities had insisted the investment was illegal because it was done without prior approval. But UMC, the world’s second biggest contract microchip maker, claimed it had informed the government. Then UMC chief Robert Tsao was indicted in 2006 for breach of trust and violation of accounting rules over the investment. The island’s High Court acquitted him in September.