UMC Earnings Call: Raises 2024 Capex to $2 Billion, Dual-Track Expansion in Singapore and Taiwan

UMC (2303-TW)(UMC-US) held its earnings call today (29th), where CEO David Wei announced that the company's capital expenditure for this year will be raised from $1.5 billion to $2 billion. The funds will primarily be used for investments in specialty processes, advanced packaging, and AI-related capacity. Additionally, the board has approved approximately $5 billion in capital expenditure to be phased in between 2026 and 2027 based on customer commitments, orders, and market demand.

David Wei emphasized that the company's capacity expansion will be carried out in phases to ensure that capital spending aligns with customer demand and business progress, avoiding overexpansion of production capacity.

Today, UMC announced that the board has approved a phased expansion plan to expand cleanroom capacity at its Singapore facility while simultaneously commencing shell construction for a new fab at the Tainan Science Park in Taiwan. This dual-track expansion strategy aims to meet customers' near-term needs while establishing a long-term production footprint to capture business opportunities in high-growth areas such as AI and edge computing.

UMC believes this strategy will significantly shorten the time required for future capacity setup and ensure that capital expenditure is closely linked to customers' long-term commitments.

Chairman Hsieh, Jha-Chung stated that the rise and rapid development of generative AI are fundamentally reshaping the technology industry landscape, accelerating market demand for high-performance, high-bandwidth, and highly integrated system technologies. UMC's expansion plan aims to continuously meet market demand through a phased strategy that balances speed, flexibility, and capital discipline.

Hsieh, Jha-Chung added that in Singapore, UMC will invest in cleanroom and equipment procurement at its Phase 4 (P4) facility to expand silicon photonics capacity. Since the factory shell is already complete, the company can expand promptly and efficiently to meet growing customer demand. In Taiwan, a new wafer fabrication facility will be constructed as the future base for Phase 7 (P7) and Phase 8 (P8), laying a solid foundation for UMC and its customers to jointly advance long-term product roadmaps and technology development. This phased strategy enables UMC to maintain strict capital discipline, reduce early depreciation burdens, and ensure leadership in the AI-driven future.

The new Tainan fab will strengthen Taiwan's role as UMC's global leading manufacturing and advanced R&D base, expanding the company's footprint in advanced packaging. The expansion of the Singapore P4 facility will further solidify Singapore's role as UMC's largest production base outside Taiwan, supporting geographically diversified supply chain resilience while advancing cutting-edge technologies including silicon photonics.

By product, the Singapore P4 facility will expand silicon photonics capacity, while the P3 facility will increase BCD power management and silicon photonics capacity. In Tainan 12A P7 and P8, advanced packaging infrastructure will be built, and customized memory stacking and deep trench capacitor (DTC) solutions will be introduced. Some capital expenditure will also be used for 8-inch capacity construction, with volume production ramp-up expected to begin from late 2027 to early 2028, and benefits gradually materializing from 2028 to 2029.