HSINCHU, Taiwan -- United Microelectronics Corp., the world's second-largest foundry, may have to halt production at its newly built plant after Taiwanese government officials revoked a construction permit following the plant's failure to meet environmental regulations.
The Environment Protection Administration asked UMC to immediately shut down its Fab 5, which is located in the Hsinchu Science-based Industrial Park and started a pilot production run earlier this month. UMC is required to submit an environmental impact assessment since the fab is near a water reservation area, according to EPA officials.
"Once the assessment is approved, the EPA will issue a permit in about a month," the agency said in a statement.
UMC said it will stop the pilot run upon receiving an official letter from the EPA. Still, the company sees only a limited effect on its production plans. "Our revenues won't be hurt, because Fab 5 is just in the initial [produ ction] stage," said a UMC spokesman.
The EPA decision nevertheless comes at a bad time. Foundries worldwide are struggling to add more manufacturing capacity to keep pace with booming demand from fabless IC houses and from companies which own production plants but are looking to outsource new manufacturing to defray rising capital improvement costs. All of the production lines at UMC and rival Taiwan Semiconductor Manufacturing Co. have been fully booked for months.
UMC's Fab 5 is just ramping up but upon reaching full production stage in the first quarter of 2002 is slated to produce 40,000 8-in.-equivalent wafers a month. This year, UMC will raise its annual capacity to 2.4 million wafers, jumping from 1.75 million in 1999.
UMC may not be the only company affected by the environmentalregulations. The EPA said it is reviewing whether Macronix International, Promos Technology, and Worldwide Semiconductor also will need to provide environmental safety assurances for plants they are building in the area.
UMC's stock dropped 4% to $3.20 Friday following the EPA decision.