UMC expects more joint ventures

Feb. 11, 2002 — Taiwan’s United Microelectronics Corp. has plans to announce more joint venture partnerships similar to a multibillion-dollar agreement with Advanced Micro Devices Inc. touted earlier this month.

UMC Chairman Robert Tsao said the company expects more joint-venture agreements later this year, but didn’t name prospective partners, according to reports from Dow Jones.

The agreement between AMD and UMC calls for the two chip makers to build a next-generation silicon wafer fabrication plant in a 50:50 partnership. Analysts estimate the plant, scheduled to go into production in mid-2005, will require an investment of around US$3 billion.

Tsao said the AMD-UMC alliance is very significant. “This is not just an agreement, it’s a full-scale alliance,” he told Dow Jones.

He said the move toward larger, next-generation wafers marks a “paradigm shift” for the global semiconductor industry.

Only a few vertically-integrated chip companies, such as the world’s largest chip maker, Intel Corp. (INTC), will have the economies of scale to migrate to the advanced production technology on their own, Tsao added.

The fabrication of silicon wafers measuring 300 millimeters in diameter, compared to the current standard of 200-millimeter wafers, is projected to lower production costs by at least 30% a chip.

Still, only the world’s biggest chip makers have the balance sheets and economies of scale needed to justify the investment in such plants.

Analysts predict smaller makers will be forced to seek partnerships with contract chip manufacturers such as UMC to make the move to the advanced production technology, and take advantage of the lower production costs.

Tsao said that Singapore, where the AMD-UMC joint venture will be located, is also likely to become the Taiwan company’s center for research and development activity in coming years.

If that happens, it would be a serious blow to the Taiwan government’s efforts to keep such activities on the island.

Taiwan has already seen many of its manufacturers move production lines to lower-cost locations, mainly in China.


Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.