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Continuing its conservative approach to capital expenditure and capacity additions, UMC is raising CapEx for 2010 to between US$1.2 and US$1.5 billion. CapEx for 2009 was reported as US$550 million. The increased spending was due to strong demand for leading-edge technology, which is capacity constrained at its two, 300mm fabs. UMC said that overall fab utilization fell slightly in the fourth quarter to 86%, down from 89% in the seasonally strong third quarter. Utilization rates are expected to remain in the high-80’s for the first quarter of 2010 and wafer shipments to be flat with the previous quarter.

 "Capital expenditure for 2010 will mainly be used to build capacity for advanced processes,” noted Dr. Shih-Wei Sun, CEO of UMC. “We plan to boost 45/40nm process capacity and continue to introduce 28nm R&D and pilot production equipment at Fab12A in Tainan, as well as greatly expand 65/55nm process capacity at Fab12i in Singapore. In addition, we plan to accelerate the readiness timeframe of Fab12A's phase 3 cleanroom related facilities and equipment installation to meet demand for advanced technology capacity and provide for a more flexible expansion plan. At the same time, we will pay close attention to the pace of the continuing economic recovery and the successive adjustments of U.S. and China's monetary policies. UMC will continue to diligently monitor economic conditions over the next several quarters and react prudently in accordance."

In a conference call with financial analysts, UMC executives noted that spending would be first-half year loaded as it struggles to meet demand. UMC expects approximately 94% of the CapEx budget to be allocated to 300mm fab expansions and node migrations.