UMC plans NT$100 billion capacity expansion in southern Taiwan

Taipei-United Microelectronics Corp. (UMC), the second-largest contract chipmaker in Taiwan, announced on Wednesday an investment project worth NT$100 billion (US$3.58 billion) aimed at expanding capacity at its 300 mm Fab 12A Phase 6 (P6) in Tainan, southern Taiwan.

The investment was made through collaboration with several of its leading global customers, the Hsinchu-headquartered silicon wafer foundry said in a press release.

"Under this mutually beneficial arrangement, these customers will each make a deposit that secures their long-term chip supply at P6 using pre-determined pricing that will enable UMC to grow organically and meet its long-term profitability and market relevance goals," the company said.

S.C. Chien (???), a co-president of UMC, touted the P6 cooperation model as a strategic partnership between the company and its customers, aimed at securing mutual commitment and healthy collective growth for all the firms involved.

The P6 program is supported by a multi-year product alignment between UMC and the customers involved, with a loading protection mechanism to ensure that capacity is maintained at healthy utilization rates, he said.

P6 will be equipped with 28-nanometer tools that have the flexibility to produce smaller nodes down to 14nm, so that it can accommodate customers' future development, he added.

Furthermore, the building structure for UMC's Fab 12A P6, located in the Tainan Science Park, is already built, adding a time-to-market advantage versus building a new fab from scratch, Chien said.

According to UMC, the P6 expansion is scheduled to begin production in the second quarter of 2023, with total investment for the project reaching NT$100 billion.

In addition to UMC's previously announced US$1.5 billion in capital expenditure for 2021, the bulk of which is allocated to equipment for the company's Fab 12A P5 site adjacent to P6, total UMC investment in the Tainan Science Park will reach approximately NT$150 billion over the next three years, the company said.

While there have been market reports suggesting that Samsung, Qualcomm and MediaTek are among customers of UMC that are joining the capacity expansion project, there have been no comments from either UMC or the named businesses.

Also Wednesday, UMC announced that it generated NT$47.1 billion in consolidated revenue in the first quarter of 2021, a 4-percent growth from NT$45.30 billion in the fourth quarter of the previous year.

Compared to a year ago, the Q1 revenue grew 11.4 percent year-on-year from NT$42.27 billion in the same period of 2020.

UMC also reported that the consolidated gross margin was 26.5 percent in Q1, up 2.6 percentage points from Q4 in 2020 and up 7.3 percentage points from the same period of last year.

In Q1, the company generated NT$10.43 billion in net income attributable to the stockholders of the parent company, with earnings per ordinary share of NT$0.85, UMC said.

It anticipated that the demand will still outstrip supply in the market in Q2 amid a global shortage of semiconductor components, enabling the company to continue to run at full capacity.

Source: Focus Taiwan News Channel