Potential scandal, possibly related to insider trading, has reared its head at the world’s second largest silicon foundry, United Microelectronics Corporation (UMC) of Taiwan.

Following raids by the Taiwan legal authorities on UMC’s offices in Taipei and Hsinchu, the Hsinchu District Prosecutor’s Office was asked by Reuters if the case involved insider trading and was told: "it involves one or two senior UMC executives. We are still investigating.”

The Hsinchu authorities said they had had the case referred to them by Taiwan’s Financial Supervisory Committee.

UMC said in a statement: "According to the documents provided by the staff of the Hsinchu District Prosecutors Office, this investigation is related to alleged personal investment in shares of ProMos Technologies by a single individual associated with UMC, and is not directed specifically at UMC itself and has had no material influence on the operation of the company."

UMC said it was "unaware of inappropriate activities that might constitute violation of any applicable regulations, and as of today, the investigators have not found any evidence to suggest otherwise".

UMC first bought shares in ProMOS in 2006. It currently has a 7 per cent stake in the DRAM manufacturer.