Expanded chip wafer shipments foreseen by UMC amid tariff unpredictability
Title: UMC Forecasts Growth While Navigating US Tariff Uncertainty
By: Lisa Wang – Staff Reporter
In the face of Donald Trump's erratic US tariff policies, United Microelectronics Corp (UMC) predicts a 7% sequential rise in wafer shipments this quarter, with a factory utilization rate hitting 75%. This growth suggests that customers have maintained their ordering behavior, unaffected by the volatile tariff landscape.
However, Liu Chi-tung, UMC's CFO, expressed concerns about the second half of the year, as the ongoing trade tensions create uncertainty for the semiconductor industry. Some customers are hesitant and guarding their investments, but others are eagerly pursuing new opportunities. Liu pointed out that the net impact on the second quarter is minimal due to this mixed response.
UMC has received requests from customers to speed up its 12nm capacity expansion in partnership with Intel Corp. This push comes as the tariff environment and geopolitical tensions drive a reshoring interest, making it essential to have early access to a 12nm solution compatible with their ambitious product roadmaps. UMC assured investors that they are on track to ramp up 12nm chip production at Intel's Arizona facility by 2027.
Contrary to rumors, UMC denies any ongoing merger talks with GlobalFoundries Inc to avoid US semiconductor tariffs. Liu hinted at the possibility of other collaborative opportunities to boost shareholder value and returns.
UMC reported its lowest profit in nearly two years, with net profits declining 8.5% quarterly and 25.6% annually. The company anticipates a rebound in gross margin this quarter, reaching approximately 30%, excluding the impact of one-time pricing reductions. UMC notes an increase in the demand for chips used in communications, computers, and consumer electronics, which is expected to drive up the factory utilization rate compared to the previous quarter.
UMC expects to grow its revenue this year by more than 3%, outpacing the low-single-digit percentage increase in the world foundry sector. Despite the promising forecast, the company remains cautious about demand for chips for cars and industrial devices due to excessive inventory.
Photo credited to Grace Hung, Taipei Times
Enrichment Insights:
- UMC-Intel Partnership: UMC and Intel have joined forces on a 12nm process toolkit, utilizing Intel's fabrication infrastructure to support third-party contract manufacturing. This partnership aims to modularize Intel's legacy nodes and lower barriers for smaller designers to access advanced nodes.
- Capacity Expansion Initiatives: UMC recently expanded its Singapore 22nm fab and is collaborating with Intel on a 12nm project. This strategy diversifies UMC's focus beyond cutting-edge nodes, emphasizing mature nodes for the automotive and IoT markets.
- Industry Impact: The UMC-Intel collaboration could reshape mid-tier semiconductor supply chains, pressuring competitors like GlobalFoundries (previously linked to merger talks with UMC) by combining Intel's fabrication scale with UMC's customer-facing flexibility. The partnership aligns with U.S. efforts to boost domestic chipmaking capacity and increase technology accessibility.
- Challenges: Integrating Intel's siloed 14/10/7nm facilities for third-party design compatibility remains technically complex, and market uncertainty due to trade tensions may affect the partnership's near-term ROI.
- Lisa Wang's report reveals that UMC, despite US tariff uncertainty, predicts a 7% sequential rise in wafer shipments, with a factory utilization rate reaching 75%, suggesting that customers are maintaining their ordering behavior in the face of volatile tariff landscape.
- UMC CFO Liu Chi-tung expressed concern about the second half of the year due to ongoing trade tensions creating uncertainty for the semiconductor industry, revealing that some customers are hesitant and guarding their investments while others are pursuing new opportunities.
- UMC has received customer requests to speed up its 12nm capacity expansion in partnership with Intel Corp, driven by a reshoring interest prompted by tariff environment and geopolitical tensions, necessitating early access to a compatible 12nm solution for their ambitious product roadmaps.
- UMC denies any ongoing merger talks with GlobalFoundries Inc to avoid US semiconductor tariffs, hinting at the possibility of other collaborative opportunities aimed at boosting shareholder value and returns, as they anticipate growth in revenue this year, outpacing the low-single-digit percentage increase in the world foundry sector.
