TAIPEI Taiwan's Powertech Technology Inc (6239.TW) said Friday it was terminating a share agreement with China's Tsinghua Unigroup Ltd, unraveling more than $2 billion in deal-making that the state-run Chinese giant had hoped to seal on the island.
Powertech, a Taiwanese chip tester and packager, said the plan was being scrapped because a one-year period authorized by its shareholders to get the deal approved in Taiwan was about to lapse and local regulators had yet to give a green light.
"In light of this, the board determined the private placement would not be completed within the timeframe authorized by shareholders," Powertech said in a statement.
The company said it did not rule out future cooperation with Tsinghua Unigroup.
The original deal, announced in late 2015, would have given the Chinese giant a quarter stake in Powertech for $600 million.
The termination of Powertech's share sale comes after two local rivals, ChipMOS Technologies Inc (8150.TW) and Siliconware Precision Industries Co (SPIL) (2325.TW), separately called off similar sale of their shares to Tsinghua Unigroup last year.
Tsinghua Unigroup would have invested a total of around $2.6 billion for partial stakes in all three companies had the deals been successful.
But its failure to clinch regulatory approval on the island comes at a time when ties between China and Taiwan have cooled since Taiwan President Tsai Ing-wen and her ruling independence-leaning Democratic Progressive Party (DPP) took power last year.
China deems Taiwan a wayward province to be taken back by force if necessary, and has been pressuring Tsai to concede to Beijing's "one China" principle.
Taiwan has protected its prized chip industry from becoming too reliant and open to China, and Tsinghua Unigroup's investment plans were going to have to go through unprecedented parliamentary review in Taiwan, which had not yet happened.
In November, Tsinghua Unigroup said via one of its units that its plans to take a partial share in Powertech and ChipMOS faced rising risks due to an ongoing regulatory review in Taiwan.
(Reporting by J.R. Wu; Editing by Alison Williams)