UMC Board Resolves to Enter a Joint Venture Agreement for a 12” Fab in China
3-way venture with Xiamen Municipal People’s Government and FuJian Electronics & Information Group will serve local and international foundry customers
Hsinchu, Taiwan – October 9, 2014 – The Board of Directors of United Microelectronics Corporation (UMC) (NYSE: UMC; TWSE: 2303), a leading global semiconductor foundry, today resolved to participate in a 3-way agreement for a joint venture company focused on 12” wafer foundry services with Xiamen Municipal People’s Government and FuJian Electronics & Information Group. Based on the agreement, UMC will submit an investment application with ROC government authorities for approval to invest in the joint venture established by Xiamen Municipal People’s Government and FuJian Electronics & Information Group. The joint venture will be based in Xiamen, China. UMC anticipates its investment could reach approximately US$1.35 billion in the next five years, with funding starting in 2015 deployed in installments based on the progress of the joint venture. UMC’s participation will comply with ROC rules and regulations and will be subject to review for approval by the Taiwan government authorities.
Po-Wen Yen, CEO of UMC, said “China’s domestic semiconductor market has become the world’s largest. Current levels of domestic semiconductor demand far outweigh China’s production supply, with semiconductor import revenue surpassing that of crude oil. As the semiconductor industry is closely monitored by the Beijing government, China has implemented national policies to expedite the development of its domestic IC design and semiconductor manufacturing through a multi-prong approach to support and expand its IC industry. We believe our decision to establish local manufacturing is our best approach to benefit from this substantial China growth and to gain additional foundry opportunities worldwide. The joint venture not only provides our customers the option to source IC components that are made in China, but also locates us within the Chinese market to enhance UMC’s service and support for local fabless customers. We anticipate the joint venture can propel the next round of UMC’s foundry business growth.”
CEO Yen continued, “The benefits for choosing Xiamen for the fab location are numerous. Xiamen is one of the five cities designated by China as a municipality with independent planning status. Xiamen boasts excellent living standards and high quality of life; it is only a short distance from Taiwan, with similar culture, language and climate, allowing seamless support from UMC’s headquarters in Taiwan. Furthermore, Xiamen has a well-established infrastructure to supply sufficient local engineering talent to establish a world-class foundry base for the company.”
UMC currently owns an 86.88% stake in HeJian Technology (Suzhou) Co., Ltd. which mainly provides 8” foundry services for Asia-Pacific and Mainland Chinese customers. Today’s announced joint venture will manufacture 12” wafers, initially offering 55nm and 40nm technologies. Capacity will reach 50K per month, with total investments targeted at US$6.2 billion. In addition to expanding UMC’s manufacturing scale, increasing global foundry market share and stimulating revenue growth, this joint venture will better fulfill customers’ demand, process technology, and integration requirements to achieve the highest synergies for UMC group.
UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor foundry that provides advanced technology and manufacturing for applications spanning every major sector of the IC industry. UMC’s robust foundry solutions allow chip designers to leverage the company’s leading-edge processes, which include 28nm poly-SiON and gate-last High-K/Metal Gate technology, mixed signal/RFCMOS, and a wide range of specialty technologies. Production is supported through 10 wafer manufacturing facilities that include two advanced 300mm fabs; Fab 12A in Taiwan and Singapore-based Fab 12i. Fab 12A consists of Phases 1-4 which are in production for customer products down to 28nm. Construction has been completed for Phases 5&6, with future plans for Phases 7&8. The company employs over 15,000 people worldwide and has offices in Taiwan, mainland China, Europe, Japan, Korea, Singapore, and the United States. UMC can be found on the web at http://www.umc.com.
Note from UMC Concerning Forward-Looking Statements
Some of the statements in the foregoing announcement are forward looking within the meaning of the U.S. Federal Securities laws, including statements about future outsourcing, wafer capacity, technologies, business relationships and market conditions. Investors are cautioned that actual events and results could differ materially from these statements as a result of a variety of factors, including conditions in the overall semiconductor market and economy; acceptance and demand for products from UMC; and technological and development risks. Further information regarding these and other risks is included in UMC’s filings with the U.S. Securities and Exchange Commission, including its registration statements and reports on Forms F-1, F-3, F-6 and 20-F and 6-K, in each case as amended. UMC does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.