With consumer electronics in a seasonal downturn and no strong market recovery in sight, ABF substrate leader Unimicron expects first-quarter revenue to dip by a single-digit percentage. The company expects clearer visibility on 2025 orders after the second quarter but remains upbeat on the demand for AI servers and application-specific integrated circuits (ASICs) in the second half.
Tighter US chip restrictions under Donald Trump could disrupt operations at Unimicron's high-end ABF substrate plants in China. As a precaution, the company has taken a conservative stance on first-half performance.
Unimicron's Suzhou (China) plant, responsible for over 10% of total revenue, is its primary ABF substrate production site in China, said Vincent Chung, senior VP of Finance. He clarified that US sanctions only affect sub-7nm products, with the full impact still under evaluation.
Unimicron has restructured its portfolio, with AI applications now making up 30-40% of production. While yields have improved, meaningful capacity expansion won't materialize until mid-2025. AI-related revenues are expected to grow further, while gaming consoles, memory modules, and consumer electronics remain at around 20% each.
Unimicron is expanding into new markets like optical communication and low-earth orbit (LEO) satellites, with products already in mass production. The company expects 800G optical transceivers to dominate by 2025 and is ramping up efforts for 1.6T module upgrades.
First-quarter utilization rates for ABF and HDI boards will hold steady from the fourth quarter, but BT substrates—used in memory, consumer electronics, and automotive applications—will drop from 70-75% to 65%.
Unimicron's fourth-quarter 2024 margins and profits took a hit due to higher capital expenditures, rising depreciation costs, and extended learning curves amid a product transition.
Unimicron will maintain annual capital spending at around NT$18.4 billion (approx. US$560.9 million) over the next two to three years. Nearly 45% will fund the next-phase expansion at its Guangfu (Hsinchu, Taiwan) plant, 20% will go to a new PCB plant in Thailand, and the rest will support sites in Yangmei (Taoyuan, Taiwan) and Suzhou.
Unimicron's Guangfu plant specializes in ABF substrate production, featuring advanced automation and smart manufacturing. With construction ahead of schedule, mass production is underway, and customer feedback on yields has been positive. The company expects steady revenue contributions from the site.
Unimicron's Yangmei facility is geared toward high-end products. However, amid declining orders from key clients, the company is exploring reallocating idle capacity to other customers.
Unimicron's new PCB plant in Thailand is in the equipment installation phase and aims to begin mass production in the second half of the year, keeping pace with other major Taiwanese firms. The site will focus on memory modules, gaming console PCBs, and LEO satellite boards. To mitigate geopolitical risks, the company is also considering shifting some of the high-layer count of PCB production there.
Article translated by Levi Li and edited by Jingyue Hsiao
