Fri, May 25, 2012 - Page 12 News List

UMC plans to invest US$8b in new fabs

REAPING HARVEST:The chipmaker was optimistic about future revenue because it is ready to profit from its investment in 28nm and 40nm chip fabrication

By Lisa Wang  /  Staff reporter, in Greater Tainan

United Microelectronics Corp (UMC) Chairman Stan Hung, center, CEO Sun Shih-wei, second right, and others prepare to shovel dirt at a groundbreaking ceremony at a new UMC plant in the Southern Taiwan Science Park in Greater Tainan yesterday.

Photo: Hung Yu-fang, Taipei Times

United Microelectronics Corp (UMC, 聯電), the world’s No. 2 contract chipmaker, yesterday said it planned to spend US$8 billion to expand its advanced chipmaking capacity over the next few years to drive growth, joining rivals like Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in stepping up spending on new technologies to safeguard its market position.

Despite growing worry about the global economy triggered by the eurozone debt crisis and its ripple effect on electronics spending, UMC said increasing capacity was rational as it is backed by customer demand.

“The expansion heralds UMC’s new generation of 300mm manufacturing that will extend 28nm [chip] production and establish a solid foundation for 20nm chips and beyond to meet consumer demand for high-end chips, thus ushering in the company’s next era of growth,” UMC chairman Stan Hung (洪嘉聰) said.

The investment would add 50,000 12-inch wafers of capacity per month to an advanced plant in Greater Tainan after production lines begin operating fully, Hung said. The plant will make 80,000 12-inch wafers a month at full capacity.

The chipmaker is scheduled to ramp up production of 28nm chips in the second half of this year and is set to start testing production of next-generation 20nm chips at the end of next year, UMC chief executive officer Sun Shih-wei (孫世偉) said.

Shrugging off concerns about the state of the world economy, Sun said that the chipmaker would “hit its second-quarter financial forecast and continue to grow in the third quarter, which is a high season for the contract chip industry.”

UMC’s revenue is expected to grow 15 percent this quarter from last quarter’s NT$23.77 billion (US$802 billion), as the chipmaker forecast that wafer shipments would increase at a 15 percent quarterly rate, while prices would remain flat.

The growth would be boosted by strong end demand for communications devices such as smartphones and tablets along with the consumer sector to help UMC hit its target, according to Sun.

UMC is expected to increase revenue by high single-digit percentage points next quarter from this quarter, slightly lower than the 10 percent growth rate estimated earlier, because of increasing concern about the European debt crisis and sagging notebook demand ahead of Microsoft Corp’s introduction of its new Windows 8 system, Credit Suisse analyst Randy Abrams said in a report yesterday.

Sun also said that he was optimistic about the company’s business outlook.

“UMC is entering a harvest period,” he said, as the company expects its heavy investment in developing 40nm and 28nm technologies over the past years to bear fruit in the second half of this year.

“Our new technology is ready and we have customers too,” Sun said. “There will be only a small handful of companies capable of delivering 28nm chips around the globe.”

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