Technology

Chipmaker says it will boost production of older 28nm chips

chipmaker-says-it-will-boost-production-of-older-28nm-chips

Enlarge /. A woman observes a mask – a part used in wafer design – in a showroom at the United Microelectronics Corp (UMC) 12-inch factory in Tainan, southern Taiwan.

Sam Yeh | Getty

United Microelectronics Corporation (UMC), the world’s fourth largest contract chip manufacturer, is expanding its capacity to manufacture sophisticated technology chips in exchange for financial guarantees in response to the shortage in the global semiconductor supply chain.

UMC announced it will increase its capacity to produce 20,000 wafers per month at 28 nm, one of the process technology hubs most affected by the global chip shortage in an existing manufacturing facility or “factory” in Tainan.

The investment will increase the company’s investments this year by 53 percent to $ 2.3 billion. However, it is made under a contract under which several of UMC’s largest customers are required to make advance payments and guarantee certain orders at a fixed price.

The deal is highly unusual for contract chipmakers. The flexibility to accommodate orders from different customers has long been a cornerstone of their profitability.

However, this model has come under fire as the first automaker, and now more and more other sectors have failed to secure enough chips from foundries like UMC and Taiwan Semiconductor Manufacturing Company (TSMC), the global industry leader.

UMC said the deal was an “innovative win-win arrangement”. “This will strengthen our financial position to take advantage of the market opportunity,” UMC President Jason Wang told investors.

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TSMC announced this month that it will invest $ 100 billion in new capacity over three years. Intel recently announced a $ 20 billion investment program designed to challenge TSMC to offer contract chipmaking services.

However, the global chip shortage is expected to continue undiminished. UMC announced that capacity utilization was 100 percent in the first quarter and would stay there for the time being. The company expects the average selling price of its chips this year to increase by 10 percent compared to 2020.

“There is an imbalance between supply and demand in mature nodes,” said Liu Chi-tung, UMC’s chief financial officer. “We’ve seen a lot of capacity expansions in advanced nodes, but companies haven’t looked at the mature nodes. There are many critical components on these nodes. “

SK Hynix, the world’s second largest memory chip maker, plans to bring some of its planned investments forward over the next year to the second half of the year in order to meet the increasing demand for chips.

The South Korean company said Wednesday that demand was stronger than expected and forecast that the supply-demand imbalance will worsen in the coming quarters. D-Ram chip shipments are expected to remain tight throughout the year and a faster-than-expected recovery in demand and prices for Nand memory chips is forecast.

While the UMC deal aims to address the shortage, it is expected to take at least two years to take shape, highlighting the depth of constraints in the semiconductor supply chain.

Although the factory planned for the capacity expansion is already in place, mass production is not expected to start until the second quarter of 2023, as important tools are also in short supply. “We work together with our suppliers. There is a lead time for the equipment, ”said Wang.

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Steven Gregory