Chipmaker UMC to inject $500 mil. capital into China subsidiary to expand 5G line

13, Feb. 2020

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TAIPEI, NNA – Contract chipmaker United Microelectronics Co. aims to meet rising demand for 5G chips and processors for the internet of things by injecting about 15 billion New Taiwan dollars ($500 million) more into a China factory.

The Taiwanese contractor better known as UMC announced Tuesday it would give that capital to its subsidiary United Semiconductor Xiamen, which manufactures wafers through another subsidiary, Hejian Technology (Suzhou) Co., the company said in a filing with the Taiwan Stock Exchange.

UMC has a more than 60 percent stake in the joint venture with the Xiamen municipal government.

UMC anticipates a stable first quarter on demand for 5G wireless equipment and power management applications, company co-president Jason Wang told a Feb. 5 investor conference.

He said the deadly COVID-19 respiratory disease outbreak in mainland China could damage the whole semiconductor supply chain in the country if it gets worse but dismissed any immediate concern.

The 4-year-old Xiamen factory’s monthly capacity reached 17,000 wafers last year. Its new injection will let UMC grow monthly production to 25,000 wafers by mid-2021, Taiwan’s Economic Daily News reported.

The same plant also raised its monthly output from 64,000 chips in 2018 to 77,000 at the end of 2019. That increase will help UMC tap into demand for 5G-related integrated circuits and transistors that can amplify or switch electronic signals, according to the report.

UMC reported net income of NT$3.84 billion in the fourth quarter of 2019, a 31 percent increase from the previous quarter. Some of that revenue comes from UMC’s acquisition of Japan-based Mie Fujitsu Semiconductor Ltd. last year.

The company reported revenue of NT$148.2 billion last year versus NT$151.25 billion in 2018.