It is learned from reports that the order received by UMC this time mainly comes from Apple’s power amplifier supplier Qorvo.

Verizon is primarily responsible for designing new iPhone antenna components for Apple, integrating new chips and providing Qorvo power amplifiers. The new chips use UMC’s 3DIC technology and are manufactured by UMC.

Verizon’s power amplifier products have previously been mainly looking for gallium arsenide foundries such as Wenmao. The reason for cooperating with UMC this time is because Verizon acquired Anokiwave Company (a wireless communication chip factory) at the beginning of this year. Verizon will acquire part of Anokiwave The order is outsourced to UMC, and the antenna products produced by both parties will be used in Apple’s new iPhone, and production is currently being gradually increased.

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Supply chain sources said UMC is evaluating plans to build a new 12-inch wafer fab in Mie Prefecture in central Japan. UMC is the world’s third-largest foundry and a major supplier to Denso and other Japanese chipmakers.

▲ UMC triple factory, picture source: UMC official website

The factory will be UMC’s second chip manufacturing plant in Japan, UMC’s first factory in Japan is Fujitsu Semiconductor’s Mie factory. The new 12-inch fab in Japan means a major shift in UMC’s strategy for building a fab. For decades, UMC has maintained most of its production in the area where its headquarters is located, and UMC’s move has allowed nearly half of its 12-inch wafers to be produced in Japan.

It is learned that UMC controls more than 20% of the global chip foundry service market, and its customers include Samsung, Qualcomm, and MediaTek. In addition, UMC also provides foundry services for important automotive chip manufacturers such as Denso, NXP Semiconductors, Renesas Electronics and Infineon.

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In April 2022, UMC announced a partnership with DENSO to build the first 12-inch wafer line at the USJC facility in Japan.

Taiwan media pointed out that the majority of IGBTs are currently produced on 8-inch wafers, although in the second half of 2022 to 8-inch wafer capacity oversupply, but in the medium and long term because of the difficulty of capacity expansion, market conditions improve and demand recovery is still facing the problem of lack of capacity.

The legal person said that the past 8-inch or 6-inch wafer production of power semiconductors, in recent years began to shift to 12-inch wafer production but more difficult, UMC and DENSO cooperation, if successful, will provide effective capacity to meet the long-term demand for automotive chips.

UMC’s January 2023 revenue slipped to NT$19.59 billion (currently about RMB 4.427 billion), down 6.47% sequentially and 4.31% year-over-year, hitting a 15-month low.

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Due to customers actively adjusting inventory, UMC’s wafer shipments in the first quarter are expected to decrease by 17%-19% from the previous quarter, and the utilization rate is expected to drop to 70%, but the foundry price remains unchanged.

In response to the current downturn, UMC has implemented strict cost control measures and postponed some capital expenditures as much as possible. However, in the medium and long term, it is still expected that the structural capacity shortage of mature manufacturing processes will gradually emerge after the second half of the year. UMC postponed part of its capital expenditure in the second half of last year to this year, so last year’s capital expenditure dropped to US$2.7 billion (currently about 18.171 billion RMB), but this year it increased to US$3 billion (currently about 20.19 billion RMB).

The industry believes that if the demand is not good, even if the price is lowered, it will not be able to stimulate more demand. Therefore, manufacturers may choose to lower the utilization rate and control the output to achieve the result of maintaining the price.

Financial data show that UMC’s revenue in December 2022 will be NT$20.946 billion (currently approximately RMB 4.65 billion), a decrease of 7.1% month-on-month and a decrease of 3.3% year-on-year. four months down. In 2022, UMC’s revenue will be NT$278.705 billion, a year-on-year increase of 30.8%.

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In the first 11 months of this year, UMC’s cumulative revenue was NT$257.759 billion (about RMB 59.027 billion), up 33.74% year-over-year.

UMC previously said that due to inventory adjustments in the semiconductor industry, capacity utilization will drop to 90% in the fourth quarter and wafer shipments will decrease by about 10%, although the average selling price of products will be flat compared to the third quarter.

For comparison, UMC’s October revenue reached NT$24.344 billion (approximately RMB 5.575 billion), up 27.07% year-over-year and down 3.46% sequentially.

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The supply chain points out that UMC has obtained large orders from Infineon, NXP, Texas Instruments and other automotive chip makers, and these customers account for more than 30% of the global automotive chip market, and are also fighting for 22nm automotive certification in the near future, making every effort to attack the automotive market. Due to the reliability of automotive chips to be more than 15 years, coupled with the Zero Defects (Zero Defects) requirements, UMC has received new certifications from a number of major manufacturers, highlighting the technical competitive advantage.

It is understood that UMC has won eight key certifications in the field of automotive chips, covering power semiconductors, WiFi/Bluetooth and other wireless communication applications, millimeter wave radar sensors (Radar sensor), Auto AP, microcontrollers (MCU), CIS sensors, OLED/LCD driver ICs, micro-electromechanical sensors, etc. Almost all the necessary certifications for automotive chips have arrived.

UMC’s third-generation semiconductor business has also reported good news, benefiting from the strong demand for 5G and automotive applications, and has made five consecutive quarters of profit in the second quarter of this year, with quarterly growth.

According to UMC’s financial results, the company’s revenue in July was NT$24.827 billion (same unit below), an annual increase of 35.18%, and a new revenue record for ten consecutive months. UMC’s consolidated revenue for the first seven months of this year was NT$160.305 billion, an annual increase of 37.75%.

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