Boom time for foundry UMC despite drop in US business
Taiwanese foundry United Microelectronics Corporation (UMC) is operating at over 100 percent of capacity in the continuing chip shortage.
One of the perhaps overlooked foundries, the company has a focus on 22nm and 28nm on 12in wafers, making it a direct competitor to GlobalFoundries.
Second quarter consolidated revenue was NT$50.91bn, increasing 8.1 percent quarter-on-quarter from NT$47.10bn in 1Q21. Compared to a year ago, 2Q21 revenue was up 14.7 percent. Interestingly, revenue from the US dropped to 22 percent as part of the move to ‘on-shoring’, with Asia-Pacific unchanged at 63 percent and business from Europe was 8 percent while the business from Japan increased to 7 percent.
In 2Q21, quarterly 8in equivalent wafer shipments increased 2.9 percent to 2.440m, while quarterly capacity grew to 2.370m so the overall utilization rate in 2Q21 exceeded 100 percent (accommodating work in progress). 85 percent of the $2.3bn capital expenditure for the year will be spent on the two 12in fabs, with wafer shipments expecting to increase by 1 to 2 percent next quarter and average selling process increasing by approximately 6 percent
“Strong demand fuelled by 5G adoption and digital transformation underpinned our strong performance in the second quarter,” said Jason Wang, co-president of UMC. “Our manufacturing facilities exceeded 100 percent utilization while overall wafer shipments rose 3.0 percent QoQ to 2.44 million 8-inch equivalents. Revenue from 28nm technologies continued to grow sequentially, fuelled by applications incorporated into 4G/5G smartphones, Solid State Drive, and Digital TV.
“During the quarter, we continued our product optimization and cost reduction efforts, lifting our gross margin. We expect the strength of structural demand to sustain and support the continuous improvement of blended ASP. As a result, the Company’s gross profit in the first half of 2021 surged 54.5 percent year-on-year to NT$28.40 billion.”
“Looking ahead, we anticipate demand to stay robust in the third quarter driven by megatrends such as 5G and EV. Supply tightness is expected to continue, across 8in and 12in facilities,” he said.
“We foresee margin momentum to continue into the third quarter, supported by further product mix optimization, cost reduction efforts and productivity enhancements. In addition, we expect the adoption rate of our 22nm technologies will continue to gain traction, reflected by a pickup in customers’ 22nm product tape outs in connectivity and display applications. “We will also focus on further strengthening our leadership position in a number of specialty technologies such as OLED display driver, RFSOI and imaging applications,” he added
The company has also tackled governance issues, with five independent directors newly elected to the Company’s Board of Directors, representing over half the board seats and including two female directors. The fabs in Taipei also struggled with water shortages earlier in the year.
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