Chip Maker UMC Leaves Board of MediaTek

United Microelectronics (UMC), the world’s second-largest contract chip maker, has vacated a supervisory seat at MediaTek, Taiwan’s biggest chip-design company.

MediaTek, the world’s largest supplier of chips for optical drives, was spun off from UMC several years ago in order to focus on chip development. UMC decided a few years ago to sell off its holdings in some chip-design firms in order to concentrate on its core manufacturing business.

In February, MediaTek agreed to pay US$15 million to settle a nearly decade-old dispute against it and UMC filed by Zoran, which is based in Sunnyvale, Calif. The litigation, which began in 1997 via a company since taken over by Zoran called Oak Technology, involved a sensitive dispute against the two Taiwanese companies. Oak, which had also used UMC as a chip-manufacturing partner, had accused MediaTek of infringing its patents, with help from UMC.

UMC and MediaTek denied the allegations. But the case highlights the kind of disputes a contract chip maker such as UMC can face when serving customers that sell competing products, and being closely associated with one of those customers through shareholdings.

UMC still holds a sizeable chunk of MediaTek stock, around 6 percent, but it formerly held around 20 percent, according to Yu Mingto, the director of finance at MediaTek.

UMC’s exit leaves MediaTek with five directors on its board and two supervisors. The company declined to comment on the decision to leave the supervisor position.

-Dan Nystedt, IDG News Service

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