TAIPEI (Taiwan News) — UMC is weighing a move into advanced chipmaking to stay competitive against Chinese rivals, Nikkei Asia reported Monday.
Sources familiar with the matter said Taiwan’s second-largest contract chipmaker is exploring 6 nm production, a field dominated by TSMC, Samsung, and Intel. UMC hopes the move could serve future growth, including AI accelerators, advanced connectivity chips, and processors for consumer electronics and vehicles, they added.
UMC is also evaluating whether to expand its collaboration with Intel beyond their planned 12 nm partnership in Arizona by 2027. UMC CFO Liu Chi-tung (劉啟東) told Nikkei Asia it continues to assess more advanced manufacturing technologies but would likely need partners to share investment costs.
Advanced chip packaging is another area UMC may target. Industry observers say Beijing’s push to localize chips and the rise of China’s SMIC have pressured UMC, whose Chinese clients have shifted some orders to local contract foundries.
SMIC has now overtaken UMC as the world’s third-largest contract chipmaker by revenue, with a market cap three times bigger, thanks to Beijing’s support and domestic demand. “UMC has recognized the growing competition in mature node semiconductors,” one supply chain executive said, adding the company is urgently seeking fresh growth drivers.
The main obstacle, analysts say, is money. A 6 nm production line could cost NT$145 billion (US$5 billion) for 20,000 wafers per month, plus the challenge of securing enough customers to fill that capacity.
UMC’s capital spending this year is just US$1.8 billion, well below SMIC’s US$7 billion. Liu said the company might pursue an “asset-light” model if it decides to enter advanced production, to limit the burden of equipment costs.
UMC dropped cutting-edge chipmaking years ago due to the high costs of extreme ultraviolet lithography but the lure of higher-margin business is drawing it back.
“The most pressing issue is whether you have enough customers to take that capacity,” Counterpoint analyst Brady Wang said. “Beyond that it’s capital and technology development, which I think they can overcome and eventually won't be the biggest hurdles.”
