TAIPEI–United Microelectronics Corp. (UMC), the second largest contract chip maker in Taiwan, expects to use the approval of a large investment plan to capitalize on the growing semiconductor industry in China, market analysts said Thursday.
UMC secured approval from Taiwan’s Investment Commission to invest in a 12-inch wafer plant in China Wednesday, a development that is expected to help the Taiwanese chip maker seize business across the strait a time when Chinese authorities are gearing up to improve the country’s strength in the integrated circuit sector, they said.
China still lags behind Taiwan in semiconductor production technology, and a lack of concerns over immediate threats from Chinese IC makers was behind the Taiwan government’s decision to approve UMC’s increased investment.
UMC will now be able to invest more than US$710 million in a Chinese wafer plant located in Xiamen, Fujian Province during the 2015-2017 period. This marks the first time a Taiwanese firm will invest in a 12-inch wafer plant in China.
South Korea’s Samsung Electronics Co. has taken the lead with a 12-inch plant in China, leaving Taiwanese competitors having to play catch-up.
According to the Investment Commission, UMC will spend US$450 million of its own funds and more than US$260 million assigned by China-based Hejian Technology (Suzhou) �X in which the Taiwanese firm holds an 86 percent stake �X on the new plant.
In the future, UMC is expected to invest even more in the China plant �X up to about US$1.35 billion, making the project the largest China-bound investment from Taiwan in about two years.
The money will go into a joint venture that has been set up with the Xiamen City Government and Fujian Electronics & Information Group to churn out high-end microchips in China from the 12-inch wafer plant.
To secure approval from the Taiwan government, UMC has promised to raise its investments in Taiwan as well, the Investment Commission said.
The firm is planning to devote itself to research and development in the sophisticated 14-nanometer process and other specialty chip products in the Southern Taiwan Science Park, and expects to create 3,000 job openings over three years while raising its purchases in semiconductor manufacturing equipment and production raw materials in Taiwan.
The government said that UMC has been asked to report the progress of its local investments, adding that if it fails to keep its promise, the firm is unlikely to secure approval for its future investment applications.