Tue, Aug 31, 2021 page12

• Chipmakers’ shares rise on contracts

  CHIP SHORTAGE: Customers of UMC, Vanguard and Powerchip have agreed to buy chips at higher prices and fixed volumes for two to three years, starting next year

  • By Lisa Wang / Staff reporter
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  The share prices of three major contract chipmakers, including United Microelectronics Corp (UMC, 聯電), were yesterday boosted by media speculation that the firms are in talks with customers to sign new multiyear supply agreements with fixed prices and volumes amid a dearth of chips.

  Shares of UMC, the nation’s second-largest contract chipmaker, rose 1.78 percent to close at NT$62.8 in Taipei trading, while Vanguard International Semiconductor Corp (世界先進), a supplier of display driver ICs and power management chips, saw shares rise 0.34 percent to NT$149. Powerchip Semiconductor Manufacturing Corp’s (力積電) shares climbed 0.88 percent to NT$66.61.

  The Chinese-language Economic Daily News yesterday reported that customers of UMC, Vanguard and Powerchip have agreed to buy chips at higher prices and fixed volumes for two to three years.

  

  United Microelectronics Corp’s logo is pictured at the company’s 12-inch fab at the Southern Taiwan Science Park in Tainan on April 27.

  Photo: Grace Hung, Taipei Times

  The new contracts would take effect next year, the report said.

  This came after it was reported that the world’s top contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), was hiking its prices by 20 percent as it wanted to maintain its gross margin at 50 percent or more.

  TSMC shares increased 1 percent to NT$605 yesterday.

  As chip shortages are expected to continue into next year, UMC last month said that more customers were discussing longer-term supply contracts to secure capacity at agreed prices and volumes.

  In April, the Hsinchu-based chipmaker signed agreements with customers to invest NT$100 billion (US$3.6 billion) in expanding capacity, mostly for 28-nanometer chips, at a 12-inch fab, dubbed P6, at Tainan’s Southern Taiwan Science Park (南部科學園區).

  The agreements would not take effect until 2023, when the P6 fab ramps up production in the second quarter of that year, UMC said.

  The fab, which produces more than 87,000 12-inch wafers a month, would later upgrade to the 14-nanometer process, it said.

  “The P6 [fab’s capacity] is covered by the contracts,” UMC told investors last month, adding that customers are required to put down an initial payment to secure capacity.

  UMC said it expects demand to continue outpacing supply through the end of next year, driven by increasing demand for chips used in 5G-related applications, the Internet of Things and electric vehicles.

  Capacity was tight at all of its technology nodes for 8-inch and 12-inch wafers, and its factories were fully utilized, the chipmaker said.

  Vanguard said earlier this month that it had clinched long-term agreements with existing customers.

  The contract terms would cover newly increased capacity only, it said, adding that customers were willing to pay higher prices to cover increases in manufacturing costs.
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