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UMC to increase spending on leading-edge equipment as fab utilization rates rise

29 July 2009 | By Mark Osborne | News > Cleanroom

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UMC saw fab utilizations rates rocket in the second quarter of 2009, surpassing previous projections for the quarter. Fab utilization rates had plummeted to 30% in Q109, in response to weak demand and problems with IC inventory with customers. However, inventory restocking in ‘Q2 resulted in utilization rates reaching 79% up from an expected 75% utilization rate.

"Throughout the past year, despite the challenges brought by the global economic crisis, UMC successfully persevered," commented Dr. Shih-Wei Sun, CEO of UMC. "UMC's management team and employees worked together through this period of economic adjustment, demonstrating commendable teamwork and execution to facilitate the company's smooth reorganization and human resource consolidation. This effort resulted in significant improvements to our operating efficiency and cost structure. Looking ahead, UMC will continue to improve our utilization rate and revenues while implementing cost-control measures at the same time. We will also exercise timely CAPEX spending, aggressively invest in advanced R&D and support customers' capacity needs in order to pursue stable, long-term growth, increase profitability, and maximize return on equity."

The need for extra capacity at leading-edge nodes is forcing UMC to increase capital spending this year, exactly three-months after stating that CapEx would be kept at US$400 million for 2009, up slightly from US$350 million spent in 2008.

UMC said that spending would be raised to US$500 million with 82% of the budget specifically used for expanding 45/40nm and 65/55nm production and to acquire the R&D equipment for 28nm node development. UMC also noted that it would adopt the ‘gate-last’ approach to High-K Metal Gates for its 28nm node.

In the first-half of 2009, UMC spent only US$132 million on CapEx. Spending will therefore be second-half year loaded.

However, the increased spending is not expected to result in an overall fab capacity increase. UMC is keeping capacity, at least for the next quarter at 1,151 thousand 8-inch equivalent wafers, while making internal capacity conversions to leading-edge nodes.

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