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UMC's China expansion to have small impact
[October 25, 2014]

UMC's China expansion to have small impact


(China Post (Taiwan) Via Acquire Media NewsEdge) Although a recent investment in a 12inch Xiamen fab has bought United Microelectronics Corp. (UMC) a ticket into China's semiconductor market, analysts said the actual impact of the investment on rivals will be marginal.



UMC earlier agreed to invest US$1.35 billion in a threeway joint venture with the city government of Xiamen and statebacked Fujian Electronics & Information Group.

The announcement came two weeks after Intel Corp. agreed to take a 20 percent stake in China's statebacked Tsinghua Holdings, which owns China's largest integrated circuit designer Spreadtrum.


Commercial Time cited Berstein Research to report that UMC just bought itself a ticket to enter China's wafer foundry market by resolving to invest in the Xiamen fab.

Analysts said that UMC's current fab, Hejian, is an 8inch fab. The new 12inch joint venture fab, which is set on 4555 nanometer (nm) process technology node, requires a relatively small investment but would help UMC attract more mainland fabless customers.

Further Westward Expansion UMC has talked about the Chinese market but lacks a good way to penetrate into the market. The new fab is focused on relatively mature technologies, which are nonetheless sufficient to address many local demands and avoid the heavy capex burden in 28nm and below, according to the Commercial Times.

In addition, Partnership with China's stateowned enterprises could reduce socalled "regulatory risk." U.S.based chip designer Qualcomm, having been investigated for antitrust behavior in China, learned the hard way.

UMC's entry into China have limited impact on its competitors China' s SMIC Shanghai Co. and Taiwan Semiconductor Manufacturing Co., according to Bernstein.

On the surface, the new joint venture capacity, which churns out 50,000 12inch wafers per month, is as big as SMIC's current 12AÆ’ capacity. However, the new joint venture will not reach the planned capacity until 2020.

SMIC's Beijing jointventure fab with 35,000 12inch capacity is scheduled for completion by 2017 and it should have further capacity expansion plans in the next few years. Considering the large size and rapid growth of the Chinese market, analysts said, UMC's deployment in Xiamen would not limit SMIC's growth.

Despite China contributing 8 percent of TSMC revenue in the first half, analysts said the actual impact will be marginal.

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