Two top executives from the world's second-largest chip maker have been indicted for illegal investments.
Bob Tsao and John Hsuan, who only days were chairman and vice-chairman of United Microelectronics (UMC), will face the charges in Taiwan. It is claimed they illegally put money into Chinese semiconductor company, He Jian Technology.
Taiwan's government has restricted the ability of Taiwanese chip makers to invest in Chinese semiconductor manufacturing operations for political reasons. China views Taiwan has a renegade province and has threatened to invade if the island declares independence.
News of the indictment, which was handed down by the Hsinchu District Prosecutor's Office, came just hours after UMC announced the resignation of Tsao and Hsuan. Following their resignation during a special board meeting on Monday, both Tsao and Hsuan were appointed as special advisors to the company.
Tsao was replaced as chairman by Jackson Hu, the company's chief executive officer (CEO).
In December, Tsao said he planned to resign as chairman of UMC in March, after the company was fined by the Taiwan Stock Exchange for belatedly issuing a Chinese-language statement to notify Taiwanese investors the company had been required to restate earnings from 2002 to 2004 under US accounting rules. The change did not affect the company's earnings issued under Taiwanese accounting rules. UMC's stock is listed in both Taiwan and the U.S.
In a statement, UMC said Monday's indictment of Tsao and Hsuan did not reflect the honesty and integrity of both men. "UMC believes that the indictment of Bob Tsao and John Hsuan is of a purely political nature and caused by the special nature of the relationship between Taiwan and Mainland China," it said.
UMC's operations will not be affected by the indictments, the company said.