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Scandal may see Procomp broken up

The Procomp scandal will have a negative impact on investment in other Taiwan-based III-V operations, according to some in the industry.

The scandal surrounding the Taiwan-based GaAs chip manufacturer Procomp Informatics threatens to impact future investment in the III-V community in the region.

That s according to a senior source in the Taiwanese compound semiconductor community, who told Compoundsemiconductor.net: "The impact on the III-V industry in Taiwan will be limited because Procomp does not have a good reputation here. However, the impact will be [felt from] venture capitalists and investors."

According to reports in the Taiwan press, Procomp chairwoman Sophie Yeh is being investigated over as-yet-unproved claims of illegally transferring company assets and insider trading.

The investigation was sparked by Procomp s failure to make a corporate bond payment due on 18 June, despite the company apparently having enough liquid assets on its books to make the payment comfortably.

The cash crunch was reportedly exacerbated by the failure of Procomp s overseas share issue (see related story).

But in echoes of the Enron and WorldCom scandals that rocked corporate America in recent years, sources within the Taiwan compound semiconductor community say that up to a half of the "missing" company assets never existed and were the result of false accounting in recent years.

"Procomp shipped out the products to its branch company in the US with falsified invoices," claimed one source. "In other words, they did not have real sales and did not ship the products at all."

Whether or not this is the case is yet to be proved, and will be for the Taiwanese courts to decide.

Procomp is said to be still operating currently, and had already warned its mainly US and Japanese customers about the situation.

However, the problems at Procomp are thought to have already affected Supra Opto, the company s joint-venture with Sumitomo Electric, already. Supra specializes in ZnSe-based white LEDs, and progress on its Veeco GEN200 MBE machine has stalled, Compoundsemiconductor.net has learned.

Procomp is currently unique in Taiwan in that it has expertise in both MBE and MOCVD. A possible outcome of the scandal could see the company divided into two entities, with the MBE and MOCVD activities separated.

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