UMC announced that it will spend RMB 4.858 billion to buy back all the shares of Xiamen Lianxin 12-inch factory from the mainland joint venture shareholders. UMC believes that Lianxin's profit will increase by about 30%.
Leadcore is a 12-inch factory jointly established by UMC, Xiamen Municipal Government and Fujian Electronic Information Group. UMC said that when the joint venture established the factory, it had already agreed that after the establishment of Leadcore seven years later, UMC would buy back the shares of the joint venture and incorporate Leadcore as a wholly-owned subsidiary.
In October 2014, UMC's board of directors decided to sign a shareholding agreement with the Xiamen Municipal Government and Fujian Electronic Information Group to establish a joint venture subsidiary, Xiamen Lianxin. In March 2015, the ground was broken to build a 12-inch wafer fab, and mass production began in November 2016. , to provide professional foundry services for 12-inch wafers from 28 to 90 nanometers locally, in order to pursue further growth of the group.
UMC invested RMB 8.28 billion in this phase, and included Xiamen Lianxin as its subsidiary, and currently holds 69.95% of Xiamen Lianxin. According to the terms of the shareholding agreement between the two parties, starting from 2022, seven years after Xiamen Lianxin was established, UMC will buy back the investment shares of Xiamen Jinyuan Industrial Development Co.
In this regard, UMC announced that it will indirectly obtain all its Xiamen Lianxin shares from Xiamen Jinyuan Industrial Development Co., Ltd. through a capital increase of RMB 4.116 billion, and, through its subsidiary Hejian, will pay RMB 742 million to Fujian Electronics Co., Ltd. Information Limited Partnership acquired all of its Xiamen Lianxin shares.
UMC said that the transaction will spend 4.858 billion yuan to obtain 30.05% of Xiamen Lianxin's shares, and will complete the transaction in three installments within 3 years at a ratio of 60%, 20% and 20%. At that time, Xiamen Lianxin will become 100% of UMC. Wholly owned subsidiary. The industry expects that this move will enable UMC to fully dominate the operation of Xiamen Lianxin, which will help the operation to turn from loss to profit as soon as possible.
According to UMC's financial report, Xiamen Lianxin's after-tax loss in 2021 will be 2.368 billion yuan, an annual loss of 61.51%, and the after-tax net profit in the first quarter of 2022 will be 644 million yuan, which is significantly higher than the loss of 42 million yuan in the fourth quarter of last year and the loss of 1.589 billion yuan in the same period. Turn profit. UMC said that Xiamen Lianxin currently has a monthly production capacity of 27,500 pieces and will expand its production to 32,000 pieces this year, mainly with processes below 28 nanometers.