United Microelectronics Corp (UMC, 聯電), the world’s third-largest contract chipmaker, yesterday said that it plans to invest NT$100 billion (US$3.58 billion) over three years to expand capacity at a local factory to resolve supply constraints.
The investment would be made together with customers, UMC said, without elaborating which other firms would be involved.
There is speculation that Samsung Electronics Co, Qualcomm Inc and MediaTek Inc (聯發科) might be the Hsinchu-based company’s partners amid a severe shortage of 28-nanometer chips.
Photo: Reuters
The firms would “make a deposit that secures their long-term chip supply,” UMC said in a statement, adding that fixed pricing would enable it “to grow organically and meet its long-term
profitability [goals].”
The planned expansion is expected to add about 27,500 12-inch wafers per month to the capacity at one of the company’s fabs in Tainan, UMC said.
The program is supported by a multiyear product alignment between UMC and the involved customers, UMC copresident S.C. Chien (簡山傑) said, adding that customers would place sufficient orders to ensure healthy capacity utilization rates.
The expanded fab would be outfitted with 28-nanometer equipment which could be updated to produce 14-nanometer nodes to meet emerging demand, Chien said.
UMC has raised its capital expenditure budget for this year by about 53 percent to US$2.3 billion, compared with US$1.5 billion planned previously.
Due to the supply-demand imbalance, the chipmaker expects its average selling price to rise 3 to 4 percent quarter-on-quarter, it said.
“Looking into the second quarter, market demand will continue to outpace supply,” UMC copresident Jason Wang (王石) said, adding that shipments would rise about 2 percent quarter-on-quarter this quarter.
Gross margin is to improve to 30 percent from 26.5 percent last quarter, driven by rising revenue contribution from 28-nanometer chips, he said, adding that about 20 percent of UMC’s revenue last quarter came from 28-nanometer chips.
UMC’s net profit surged 372.5 percent to NT$10.43 billion in the first quarter, compared with NT$2.21 billion in the same period last year, company data showed.
On a quarterly basis, net profit contracted 6.9 percent from NT$11.2 billion, it showed.
Earnings per share climbed to NT$0.85 from NT$0.19 a year earlier, but down from NT$0.92 in the previous quarter, the data showed.
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