United Microelectronics (UMC), the world’s second-largest contract chip maker, said a 15 percent stake in a Chinese chip maker has been put into a trust as payment for aid in establishing the company when it was breaking into the business a few years ago.But it’s likely to raise the Taiwan government’s ire because the stake in He Jian Technology (Suzhou) could be considered illegal due to regulations controlling the flow of sensitive technologies to China.Taiwan maintains careful control over high-technology investments to China, in part due to fears certain chips or other IT gear could be used against the island in an attack. Investing in China’s chip industry without permission from Taipei remains banned, and UMC has never gained permission to take a direct 15 percent stake in He Jian.China and Taiwan separated in 1949 amid civil war, and political tensions remain high between them. In 1996, China fired missiles over the island because it didn’t like the candidate deemed most likely to win Taiwan’s presidential election. Instead of frightening Taiwanese voters, it galvanized their support for the candidate, who went on to win in a landslide. “[The shares] have been put into a trust until government rules change,” said Alex Hinnawi, a spokesman for UMC.By using a trust, UMC could ensure that a third party is watching over the shares, and that He Jian has formally made the payment. A few years ago, He Jian offered the stake as payment to UMC in return for advice on how it should set up its operations. But it’s unclear whether the trust violates Taiwanese regulations against investing in China’s chip industry. He Jian was built mainly by former employees of UMC, who moved to China to start the company. Early last year, Taiwanese prosecutors raided UMC offices in Taipei and Hsinchu, and detained nearly two dozen Taiwanese employees of He Jian. The government had been gathering evidence for a case against UMC over alleged illegal investments in He Jian.UMC has repeatedly denied wrongdoing in the He Jian case. Although the chip maker’s executives have admitted to offering extensive aid to the development of He Jian, they have maintained that they did so within legal bounds. Robert Tsao, the company’s former chairman, resigned along with another key executive in January after Taiwanese prosecutors indicted them over the issue, and Taipei has leveled fines on UMC and He Jian executives.When the 15 percent stake was offered to UMC last year, it was valued at US$110 million. The offer was made in part to allay one of Taipei’s main criticisms of the relationship between the two companies: that UMC built a competitor, threatening its shareholders by hurting its own competitive position.-Dan Nystedt, IDG News Service (Taipei Bureau)Related Link: UMC Earnings View Bodes Well for Chip IndustryCheck out our CIO News Alerts and Tech Informer pages for more updated news coverage. Related content feature 10 most popular IT certifications for 2023 Certifications are a great way to show employers you have the right IT skills and specializations for the job. These 10 certs are the ones IT pros are most likely to pursue, according to data from Dice. By Sarah K. White May 26, 2023 8 mins Certifications Careers interview Stepping up to the challenge of a global conglomerate CIO role Dr. Amrut Urkude became CIO of Reliance Polyester after his company was acquired by Reliance Industries. He discusses challenges IT leaders face while transitioning from a small company to a large multinational enterprise, and how to overcome them. By Yashvendra Singh May 26, 2023 7 mins Digital Transformation Careers brandpost With the new financial year looming, now is a good time to review your Microsoft 365 licenses By Veronica Lew May 25, 2023 5 mins Lenovo news Alteryx works in generative AI for speedy analytics results OpenAI integration and AI wizardry for report generation are aimed at making Alteryx’s analytics products more accessible. By Jon Gold May 25, 2023 3 mins Analytics Podcasts Videos Resources Events SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe