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UMC raises capex to lead in 28nm node

Posted: 29 Jan 2015 ?? ?Print Version ?Bookmark and Share

Keywords:28nm? chip foundry? 16nm? node?

The world's third-largest chip foundry, UMC, has announced the increase of its capital expenditure for 2015 by almost a third. The Hsinchu, Taiwan, company targets to obtain more orders in the 28nm node.

UMC said it has earmarked $1.8 billion for capex this year compared with the $1.4 billion it spent during 2014. During the fourth quarter of last year, the company increased its sales revenue from 28nm chips, the company's most advanced technology node, to 7 per cent, up from 3 per cent during the third quarter of 2014. The doubling of 28nm revenue was in line with the company's expectations three months ago.

"We are getting more traction on 28nm," UMC CEO Po-Wen Yen said on a conference call, announcing results for the final quarter of last year. "More than five customers are in production on 28nm. We have over 20 customers engaged and more than 60 28nm tape-outs."

UMC

UMC said it expects that 28nm products will account for "a high single-digit percentage" of its revenue during the first quarter this year. By the end of 2015, the company expects that 28nm products will account for 15 to 20 per cent of its total revenue.

"That was a good ramp on 28nm," said Bill Lu, an analyst with Morgan Stanley.

UMC is intensifying efforts to catch up with the world's leading foundry, Taiwan Semiconductor Manufacturing Co. (TSMC), which raised its capital expenditure budget for 2015 to $11.5-12 billion, up 11.5-20 per cent from 2014, mainly due to the company's expectation of stronger demand for advanced geometries. UMC is nibbling away at the 28nm segment, while TSMC is on schedule to start volume production of 16nm FinFET products by the second quarter of this year.

UMC said it expects its first tape-outs of 14nm products by the second quarter of this year.

More expectations

UMC forecast first-quarter 2015 wafer shipments to increase by about 2 to 3 per cent from the 1.431 million eight-inch equivalent wafers it shipped in the fourth quarter last year.

The company said its first-quarter capacity utilisation will be approximately 90 per cent, down from 93 per cent in the fourth quarter last year. UMC forecast that its first-quarter average selling price will rise by about 3 per cent from the previous quarter.

UMC's large capex increase indicates the company is optimistic about strong demand this year. However, the company did not provide specific expectations for its sales growth in 2015. Larger rival TSMC forecast that its sales this year will rise by a double-digit percentage from last year.

Twenty-eight nanometre has been the sweet spot for foundry leader TSMC for more than two years as virtually the sole supplier in that technology node to customers such as Qualcomm and Apple in communications products including smartphones and tablets.


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