Go your own way! UMC temporarily suspends 7nm process

 Chien Shan-chieh and Wang Shi, the co-presidents of wafer foundry giant UMC, have been at the helm for nearly two months. The company has adopted a pragmatic approach to operations and stopped chasing TSMC's advanced processes. They announced that they would temporarily stop following up on 10nm and 7nm processes and instead take their own path. They expect to increase investment profits with existing processes and win recognition from foreign investors. Let's learn more about the relevant content with the editor of Analog Electronics.

As Apple's iPhone 8 is about to be launched, the A11 processor produced by TSMC using the 10nm process is being shipped in large quantities. In addition, non-Apple camps will also launch new models. TSMC expects its third-quarter revenue to increase by nearly 16% quarter-on-quarter, and strong growth is expected in the fourth quarter.

Overall operations will improve next year

UMC has fallen far behind TSMC in advanced process technology. The newly appointed co-general manager reviewed the market reality and decided to postpone the follow-up of 10 and 7 nanometer processes. This year's capital expenditure was also reduced from the original US$2 billion to US$1.7 billion. UMC's 14 nanometer process has begun shipments and contributed to revenue in the last quarter, but it only accounted for 1% of revenue. The 28 nanometer revenue accounted for about 17%, and the 40 nanometer revenue accounted for 28%.

Improving profitability through existing processes

UMC estimates that the demand for mature processes will remain stable in the third quarter, but due to the reduction in demand for 28-nanometer business and the decline in shipments, the overall capacity utilization rate in the third quarter is about 91% to 93%, slightly lower than the second quarter, wafer shipments remain flat, and the average selling price of products in US dollars is also the same as last quarter, and the overall operating outlook will remain the same. Analysts expect that UMC's peak season in the second half of the year will not be strong, and the overall operation will improve next year thanks to the economic benefits of 12-inch mass production.

World's advanced operations are impacted

UMC announced that it would temporarily suspend follow-up on the 10 and 7nm processes and instead go its own way. It expects to increase investment returns through existing processes, including niche products such as driver ICs and power management ICs. These products have a high degree of overlap with World Advanced, and the mutual competition may impact World Advanced's subsequent operations.

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