Unigroup investment faces regulatory, political hurdles

The China Post news staff

TAIPEI, Taiwan — Tsinghua Unigroup’s ambitious move to take major stakes in Taiwan’s biggest IC packaging firms will have to overcome several hurdles, including approval from a government that has been cautious about introducing mainland Chinese investments into the country’s semiconductor industries, according to industry analysts. Unigroup dropped a bombshell on Friday after revelations that it had reached agreements separately with Siliconware Precision Industries Co. (SPIL) and ChipMOS Technologies Ltd. to take a 25 percent stake in each of the two Taiwan-based IC packagers. The announcement came only days after Unigroup and another Taiwan-base chip packager, Powertech Technology Inc. (PTI) struck a deal, paving the way for the former to become the largest shareholder of the latter. The SPIL deal was particularly shocking due to the fact that the company had recently lost a fight trying to stop what it had considered a hostile takeover by Taiwan-based Advanced Semiconductor Engineering (ASE), currently the world’s biggest chip packager. In a bid to stop the hostile takeover, SPIL tried to enlist investment from Hon Hai Precision Industry — the world’s No. 1 electronic device manufacturer — to dilute ASE’s holdings and influence. But SPIL’s shareholders rejected the Hon Hai move amid intense skepticism among market analysts and foreign institutional investors about the wisdom of such a partnership between the two firms.

Some market analysts have again pointed out that it remains uncertain how foreign institutional investors will react to Unigroup’s latest move. Their support of Unigroup’s proposal is crucial for there to be any chance of it becoming a reality.

Another major obstacle will be ASE, who now owns a 24.9 percent stake in SPIL. The Unigroup deal will see SPIL issue new shares for the Chinese investor’s subscription agreement through private placement. The capital increment means that ASE’s holdings in SPIL will shrink to less than 20 percent.

Analysts said it remains to be seen whether ASE will let Unigroup take over its role as the biggest shareholder of SPIL. How the Taiwan government weighs in on the deals will also be crucial, as all three of the investment proposals by Unigroup have to obtain regulatory approval.

Unigroup will have to provide industry cooperation plans and convince the Ministry of Economic Affairs’ Investment Commission — which oversees such investments — that it will not take control of the management of the Taiwan companies.