UMC taps customers for $3.5bn fab expansion

UMC taps customers for $3.5bn fab expansion

Business news |
By Nick Flaherty

United Microelectronics is asking customers to fund the $3.5bn expansion of its 300mm tab in Taiwan in what it calls an ‘innovative win-win collaboration model..

This follows similar moves by Global Foundries and NXP with ‘uncancellable contracts’ to guarantee supply in a tight chip market.

The expansion of Fab 12A Phase 6 in Taiwan’s Tainan Science Park sees several of its leading global customers pay upfront for their long-term chip supply at P6 using pre-determined pricing for 28nm production down to 14nm in 2023.

In addition to UMC’s previously announced 2021 CAPEX of US$1.5bn, the bulk of which is allocated towards equipment for the company’s Fab 12A P5 site adjacent to P6, total UMC investment in the Tainan Science Park will reach nearly $5bn over the next three years.

“UMC’s expansion plans follow a return based strategy that focuses on business growth while maintaining sustainable profitability,” said Stan Hung, chairman of UMC.” At the same time, we are constantly exploring innovative methods to enhance the competitiveness of our customers. Recent market dynamics have provided us and our customers an opportunity to reinforce our capital expenditure strategy within our ROI boundary, while trying to alleviate the long term capacity constraint in the supply chain.”

“Within these mature 12″ and 8″ nodes lies many critical components that play a vital role in the IC supply chain; the combination of these conditions lead us to believe that our role and position as a foundry service are experiencing a structural change that requires an innovative win-win collaboration model in order to help alleviate the industry wide chip shortage,” he said. “This P6 program is the result of our collaboration. We are pleased to engage on this new capacity expansion project that involves shared commitment from a diversified group of customers.”

“This P6 cooperation model serves as a strategic partnership with our customers that aims to secure mutual commitment and healthy collective growth for all companies involved. The P6 program is supported by a multi-year product alignment between UMC and the involved customers with a loading protection mechanism to ensure that capacity maintains at healthy utilization rates. P6 will be equipped with 28nm tools that have the flexibility to produce smaller nodes down to 14nm, creating a straightforward migration path to accommodate customers’ future development roadmaps,” said SC Chien, co-president at UMC. “Furthermore, the building structure for UMC’s Fab 12A P6 is already built, adding a significant time-to-market advantage versus building a new fab from scratch. We look forward to leveraging our No. 1 worldwide foundry market position in multiple areas such as 28nm OLED driver IC production so we may further strengthen UMC’s semiconductor industry position and capture new market opportunities down the road.”

UMC has operated in the Tainan Science Park since November 1999, when Fab 12A was established as Taiwan’s first 300mm fab. Fab 12A is currently operating at a capacity of approximately 90,000 300mm wafers per month (wpm), with an additional 10,000 wafers a month being installed at P5 this uear. The P6 project will add 27,500 more wafers when fully equipped.

This will need an additional 1000 employees to support this and other areas of the company’s operations,

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