UMC board commits NT$76.27 billion capex for equipment procurement

United Microelectronic (UMC) has announced that its board meeting has approved to commit NT$76.27 billion (US$2.72 billion) in capital expenditure for equipment purchases for a fab in southern Taiwan.

The company’s chief financial officer (CFO) and spokesperson Chitung Liu was quoted by the Central News Agency as saying that the planned capex will be used to procure new equipment for Phase 5 and 6 at its 12A Fab in Tainan Science Park. Another spokesperson explained to DIGITIMES that the expenditure is part of a budgeted investment for Phase 6, not a new investment.

The Phase 5 and 6 of UMC’s 12A Fab produces chips on 300 mm wafers. Liu explained to local media that the reason making the capex commitment is for procuring equipment that are due to be shipped 2-3 years later, because there are limited suppliers for high precision semiconductor manufacturing equipment for 28 nm and 14 nm manufacturing nodes, and the lead time can take up to 30 months.

The Economic Daily News quoted UMC as saying that the utilization rate of its equipment will remain at full throttle in 2022, whereas its production capacity will increase by 6% from this year, because there is an increase of clients signing long-term contract with them. UMC expects its sales growth rate in 2022 will exceed the 12% average forecast by the wafer foundry industry in general, according to the report.

A disclosure by UMC on the Taiwan Stock Exchange on December 13 revealed that the company has just obtained a batch of equipment from Murata Manufacturing, reflecting the optimism for demand growth behind the equipment acquisition.

Demand for chips is widely expected to grow rapidly in the next decade, as chips are needed in almost every electronic and electrical device, such as consumer electronics, home appliances, 5G infrastructure, electric vehicles (EV), and Internet of Things (IoT) sensors.