Taiwan's pure-play foundry UMC will see clear growth momentum in 2020 come from ever-increasing chips foundry demand for 5G applications, with clients moving actively to pull in shipments to build up inventory, according to company co-president SC Chien.
Chien said foundry demand has started to pick up in the second half of 2019 and will surely show explosive expansion when 5G commercialization gains traction in 2020. But he said whether the growth momentum for foundry demand will intensify further in 2021 remains to be seen.
Chien said UMC's 8-inch wafer fab now maintains a high utilization capacity of over 90%, but its market share in the 8-inch foundry segment can hardly increase significantly as the capacity available is not sufficient to meet 5G-driven demand.
Nevertheless, Chien continued, UMC is confident that it can outperform peers in specialty process nodes for fabricating chips for automotive, 5G and AIoT applications, with 70-80% of the fabrication adopting 28nm node and above.
He said that foundry demand for automotive applications has yet to rebound notably though inventory adjustments at downstream clients are almost done, as auto sales weakened by the US-China trade war are not expected to recover soon.
UMC has been conservative in capital spending, given that its capex has declined from US$2.4 billion in 2017 to US$1.4 billion in 2018 and further to US$700 million in 2019, with 75% of it spent on 12-inch foundry and 25% on 8-inch, according industry sources.
But the company just fully acquired Japan-based Mie Fujitsu Semiconductor, renamed United Semiconductor Japan (USJC), in October 2019, which can increase UMC's 12-inch capacity by 10% or 30,000 pieces per month, the sources said.
Article translated by Willis Ke
