UMC to invest $3.6 billion in fab expansion

29 April 2021
The $3.6 billion investment will expand UMC’s 300mm fab 12A at its Tainan Science Park location. Source: UMC

Taiwanese pure-play foundry United Microelectronics Corporation (UMC) has joined the growing list of semiconductor manufacturers to announce a planned expansion of capacity to help meet current and future demand for chips.

UMC said it will invest $3.6 billion to expand its 300 mm Fab 12 A Phase 6 at Taiwan’s Tainan Science Park. UMC will work with its partners to secure a long-term chip supply with production scheduled to begin in the second quarter of 2023. Additionally, UMC will invest $1.5 billion for semiconductor equipment for its Fab 12 A P5 site that is located next to P6.

“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 leads 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,” said Stan Hung, chairman of UMC.

The semiconductor market is expected to grow 5% in the next decade, leading to a boom in fab construction. The root cause of this growth is the rise in the number of semiconductors used in all things —automobiles, handheld devices, appliances, utilities, industrial automation, manufacturing and more.

Currently, the semiconductor market is in a chip shortage that is impacting the entire supply chain and hitting the automotive market hardest. In response, Taiwan Semiconductor Manufacturing Co. (TSMC), the leading foundry in the world, pledged to invest $100 billion in expanding capacity and new fabs in the next three years, including the construction of a new facility in Arizona.

Intel Corp. also said it will build two new fabs at its Ocotillo campus in Chandler, Arizona, as well as start a chip foundry program for fabless companies in the U.S. and Europe. Globalfoundries is also investing $1.4 billion to expand its three factories in the U.S., Singapore and Germany and purchased 66 acres next to its Fab 8 facility in Malta, New York, for possible further expansion.

Competition for fabs

With shortages crippling production globally, fab capacity and demand is significantly heating up. So is the desire of many regions to lure companies with these massive investments to construct new fabs.

In the U.S., the Biden Administration is pushing for $50 billion to encourage chip manufacturers to locate domestically as well as to expand research and development of new technologies. Intel said recently that it wants one-third of all semiconductor chips to be manufactured in the U.S. in the future. Currently, only 12% of all semiconductors being fabricated are made in the U.S., according to the Semiconductor Industry Association (SIA).

Taiwan and Korea both have enacted plans to boost domestic manufacturing to keep companies in those regions from going to the U.S. or other areas as well as to prep for future demand capacity.

Just this week, the European Union said it will offer subsidies to chipmakers — such as TSMC and Intel — to build new fabs in Europe to help relieve the current chip shortage and meet future demand. Specifically, Europe is interested in building manufacturing capacity for the more advanced 5 nm, 3 nm and 2 nm nodes, which are currently only offered in Taiwan and Korea. The European Union has a goal to produce 20% of all global chips by 2030.

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