United Microelectronics Corp. (UMC), the second largest contract chipmaker in Taiwan, has approved capital appropriations of more than NT$32 billion (US$1.05 billion) to expand a fab in Tainan and build another fab in Singapore.
In a statement, UMC said a board meeting on Wednesday greenlit the NT$32.42 billion investment, which comes as the global semiconductor industry faces inventory adjustments in the wake of weakening demand for tech gadgets.
Despite recent market uncertainty, analysts have framed UMC’s planned investment as a long-term growth gambit.
UMC, the world’s third-largest contract chipmaker behind Taiwan Semiconductor Manufacturing Co. (TSMC) and South Korea’s Samsung Electronics Co., is expanding its 12-inch, or 300mm, 12A fab in Tainan’s Southern Taiwan Science Park.
In addition, UMC announced plans for a 12-inch P3 wafer plant in Singapore’s Pasir Ris Wafer in a project in February. According to UMC’s timetable, the new Singapore plant will start commercial production in 2025 and use the chipmaker’s mature 22-nanometer and 28-nm process technologies.
However, in December, UMC said mass production at the new Singapore plant would be delayed by more than one quarter due to a lack of construction workers and building materials.
For the A12 fab expansion and the P3 plant construction, UMC said it would invest a total of US$10 billion over the next three to four years.
The chipmaker added that the spending was unlikely to prompt the company to cut its cash dividend payouts as it had prepared sufficient funds to cover the investment.
UMC said last week that as the United States has expanded its ban on exports of semiconductors and related equipment to China amid escalating trade tensions, many buyers were considering shifting their orders from the Chinese market to other places.
As for UMC, the chipmaker has received an increase in inquiries from potential buyers for chips made at its current 12-inch fab in Singapore.
In November, UMC’s consolidated sales fell 7.39 percent from a month earlier to NT$22.55 billion, the lowest level since March, when revenue stood at NT$22.14 billion, due to inventory adjustments in the semiconductor industry. But, the November figure still rose 14.67 percent from a year earlier.
In the first 11 months of this year, UMC posted NT$257.76 billion in consolidated sales, up 33.74 percent.
In an investor conference held in late October, UMC Chairman Jason Wang (??) said the company’s capacity utilization for the fourth quarter was expected to fall to 90 percent from 100 percent a quarter earlier, with wafer shipments expected to fall 10 percent sequentially.
In the third quarter, UMC recorded the highest-ever net profit of NT$27 billion, up 26.6 percent from a quarter earlier on the back of strong global demand for wireless communications devices and automotive electronics.
Source: Focus Taiwan News Channel