United Microelectronics Corp (UMC, 聯電), the nation’s No. 2 contract chipmaker, plans to invest US$1.35 billion in a three-way joint venture with the city government of Xiamen and Fujian Electronics & Information Group (福建電子信息集團) to make advanced chips in China.
The five-year investment, announced yesterday and set to begin next year, marks the firm’s latest effort to expand its presence in China, with an aim to benefit from the rapid growth in the world’s largest semiconductor market.
UMC currently produces chips in China at a less-advanced 8-inch factory operated by HeJian Technology (Suzhou) Co (蘇州和艦科技). In 2012, UMC gained a controlling stake of 86 percent in HeJian.
Domestic UMC rival Taiwan Semiconductor Manufacturing Co (台積電) operates an 8-inch plant in Shanghai.
“We believe our decision ... is our best approach to benefit from this substantial China growth and to gain additional foundry opportunities worldwide,” UMC chief executive officer Yen Po-wen (顏博文) said in a statement.
IC Insights Inc yesterday said China’s chip market would expand 37.76 percent to US$135 billion in 2018, from the estimated US$98 billion this year. China is heavily reliant on overseas chip supplies, as just 16 percent of those chips are to be produced in China in 2018, IC Insights added.
UMC said the new venture plans to invest US$6.2 billion in a 12-inch plant in Xiamen, which would begin operation at the end of 2016 at the earliest.
The plant is intended to produce 500,00 12-inch wafers a month on 40-nanometer or 55-nanometer process technology.
In the initial stage, UMC is to hold about 50 percent of the venture, which it aims to increase to 60 percent over time, chief financial officer Liu Chitung (劉啟東) said by telephone.
The planned investment will need approval from the Investment Commission of the Ministry of Economic Affairs.
“We believe it will take a longer time to review the plan as the investment will involve advanced technologies,” Chu Ping (朱萍), a spokesperson of the commission, told the Taipei Times yesterday.
Liu said the investment plan meets the requirements of the government’s regulations on China-bound investments.
UMC expects 5 percent of its total revenue this quarter to come from 28nm technology, making it the most advanced technology available for UMC, Liu said.
As a result, the proposed investment on 40nm and 55nm technologies in China will be one generation less advanced than 28nm, as the law requires, he said.
Last month, UMC saw revenues grow 12.96 percent to NT$12.26 billion (US$403.81 million) from NT$10.85 billion a year ago and up 7.36 percent from NT$11.42 billion in August.
During the quarter ending Sept. 30, UMC made NT$35.22 billion in revenue, down 1.81 percent from NT$35.87 billion in the second quarter.
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