Chipmaker says it will ramp up production of older 28nm chips

Enlarge / A lady watches a mask—a section utilized in wafer conception—at a exhibit home of the 12-inch United Microelectronics Corp (UMC) factory in Tainan, southern Taiwan.

Sam Yeh | Getty

United Microelectronics Company (UMC), the world’s fourth-major deal chipmaker, is growing its ability to deliver experienced technology chips in exchange for monetary guarantees, in reaction to the lack gripping the world wide semiconductor offer chain.

UMC explained it would include potential for manufacturing 20,000 wafers a thirty day period at 28 nm, just one of the course of action engineering nodes worst-strike by the global chip lack, at an current fabrication plant, or “fab,” in Tainan.

The investment decision will travel up the company’s capital shelling out for this yr by 53 percent to $2.3 billion, but is built less than a deal that commits several of UMC’s major buyers to pay back deposits upfront and warranty selected orders at a set selling price.

The offer is extremely abnormal for deal chipmakers. The adaptability to allocate capability to orders from unique consumers has lengthy been a cornerstone of their profitability.

But that model has occur under hearth as 1st automakers and now a developing array of other sectors have been not able to safe more than enough chips from foundries these as UMC and Taiwan Semiconductor Production Firm (TSMC), the world wide field chief.

UMC mentioned the offer was an “innovative, win-win” arrangement. “This will improve our financial situation to seize the market place opportunity,” Jason Wang, UMC president, told buyers.

TSMC said this thirty day period it would spend $100 billion in new capability about three yrs. Intel not too long ago introduced a $20 billion financial commitment program beneath which it desires to challenge TSMC in featuring agreement chipmaking solutions.

But the world-wide chip shortage is predicted to continue on unabatedly. UMC said its potential utilization charge was 100 p.c in the initial quarter and would keep on being there for the time becoming. The enterprise expects average offering prices of its chips to increase 10 percent this year in contrast with 2020.

“There is a provide-need imbalance in mature nodes,” said Liu Chi-tung, UMC main fiscal officer. “We have seen loads of potential expansion in superior nodes, but firms have not dealt with the experienced nodes. There are tons of crucial components on these nodes.”

SK Hynix, the world’s 2nd-most significant memory chipmaker, options to deliver ahead some of its planned cash expenditure for upcoming 12 months to the 2nd 50 % of this yr to meet surging chip demand from customers.

The South Korean company stated on Wednesday that demand from customers was more robust than predicted and forecast the imbalance in need and supply to worsen in coming quarters. It expects D-Ram chip supplies to keep on being restricted all through the 12 months and forecast a more rapidly than expected restoration in need and prices for Nand memory chips.

Whilst the UMC deal is aimed at battling the scarcity, it is predicted to consider at least two yrs to acquire form, highlighting the depth of the constraints on the semiconductor source chain.

Despite the fact that the fab dedicated for the capacity enlargement by now exists, mass creation is anticipated to begin only in the next quarter 2023 since vital applications are in limited source far too. “We are working with our suppliers. There is a direct time for gear,” Wang claimed.

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