United Microelectronics Corporation's (UMC) board of directors has decided to terminate the company's merger agreement with Hejian Technology, according to the Taiwan-based contract chipmaker.

Having been approved by UMC's board and at the company's annual shareholder meeting in 2009, the merger deal with Hejian involved a combination of common shares, ADRs and cash, UMC said in a statement.

However, UMC indicated that the issuance of shares as payment options cannot be carried out due to some restrictions under Taiwan's current laws and regulations on mergers with foreign unlisted companies.

Meanwhile, Hejian's shareholders had not decided whether to accept a cash-only merger, UMC said. Therefore, both sides have to negotiate on a new merger deal, UMC added.

UMC claimed it is still looking to merge with Hejian in the future. Therefore, the company will continue to seek possible alternatives for an integration with Hejian.

Established in late 2001, Hejian runs an 8-inch fab in Suzhou at 0.18-micron and above processes.