According to a report by Nikkei Asia on June 30, the second-largest chip foundry in Taiwan, United Microelectronics Corporation (UMC), is evaluating the feasibility of entering the production of advanced chips, a field currently dominated by TSMC, Samsung, and Intel.

United Microelectronics Corporation, commonly known as UMC, is a company based in Taiwan that provides wafer fabrication services, producing chips for various major applications across the electronics industry.

According to four sources, UMC is exploring future growth drivers, including potential production of 6-nanometer chips. This process is suitable for manufacturing advanced connectivity chips for Wi-Fi, RF, and Bluetooth, AI accelerators for various applications, and core processors for televisions and cars.

According to multiple sources, the Taiwanese chipmaker is also exploring partnership options, such as expanding its collaboration with U.S. chipmaker Intel on 12-nanometer chip production, incorporating 6-nanometer technology into it.

EETOP reported in 2024 that Intel plans to start 12-nanometer chip production in Arizona in 2027. For UMC, this deal would allow it to quickly gain access to Intel's vast production capacity, chip manufacturing tools, existing supply chains from external suppliers, and existing workforce in the United States—a region eager for foreign chip alternatives at mature nodes.

Chih-Tung Liu, UMC's Chief Financial Officer, told Nikkei Asia that the company continues to explore more advanced manufacturing technologies, but he added that making substantial progress will depend on partnerships and collaborations to reduce financial burdens. Liu refused to comment on whether UMC would expand its partnership with Intel beyond the current 12-nanometer collaboration.

Additionally, three sources said that expanding its advanced chip packaging business is another area UMC is exploring.

As recent tensions between China and the United States have intensified, UMC, the fourth-largest chip foundry globally, faces pressure from China's push for localized chip production and the development of competitors like SMIC.

According to Counterpoint Research, SMIC overtook UMC to become the third-largest chip foundry globally in the first quarter of 2024, following TSMC and Samsung Electronics.

In the first quarter of 2025, the market shares of the top five wafer foundries worldwide were as follows: TSMC led with a 67.6% market share; Samsung ranked second with a 7.7% market share, with revenue declining by 11.3%; SMIC ranked third with a 6.0% market share, with revenue increasing by 1.8%; UMC ranked fourth with a 4.7% market share, with revenue declining by 5.8%; and GlobalFoundries ranked fifth with a 4.2% market share, with revenue declining by 13.9%. These five companies together accounted for 90.2% of the global wafer foundry market.

Source: TrendForce

On June 23, a report released by Yole Group titled "Current Status of the Semiconductor Foundry Industry" indicated that China is expected to become the global leader in semiconductor wafer foundry capacity by 2030, accounting for 30% of the total global installed capacity. In 2024, mainland China held a 21% share of global foundry capacity, ranking second after Taiwan (23%). South Korea ranked third with a 19% share, followed by Japan (13%), the United States (10%), and Europe (8%).

Source: Yole Group

A supply chain executive said, "UMC has realized that competition in the mature node semiconductor sector is intensifying. To remain competitive, it urgently needs to find new growth points." "Due to the advancement of localization, some of UMC's mainland Chinese chip developer customers have shifted orders to domestic foundries. This trend has further increased the urgency for UMC to explore new opportunities."

However, many industry executives say that the biggest obstacle for UMC in entering the 6-nanometer process is the massive capital expenditure required. Building such a production line could cost up to $5 billion (about 35.8 billion RMB), with an annual output of about 20,000 wafers. Finding enough customers to utilize the additional capacity will also be a challenge.

Liu said that if UMC enters the advanced chip manufacturing field, it will adopt a more 'light-asset' model, seeking partners to share the burden rather than investing in new equipment itself.

Due to a weaker-than-expected rebound in demand for mature semiconductors, UMC's capital expenditure this year is only $1.8 billion (about 12.9 billion RMB). SMIC's capital expenditure has remained above $7 billion (about 50.2 billion RMB) consistently.

UMC is a major manufacturer of mature semiconductor products for various consumer, industrial, and application sectors, with clients including global chip developers such as Qualcomm, MediaTek, Realtek, Infineon, and Texas Instruments.

Developing and producing 6-nanometer chips typically requires advanced EUV lithography machines (extreme ultraviolet lithography machines), which cost up to $180 million (about 1.29 billion RMB) each. Chip manufacturers can also use older immersion DUV lithography machines and "multiple exposure" techniques for production, but this method may reduce production quality and efficiency.

As early as 2018, the market leader TSMC launched its first 7-nanometer chip production without using EUV chip tools. Generally, the smaller the nanometer size, the stronger the chip's performance, but the higher the development costs and challenges.

Several years ago, UMC and GlobalFoundries exited the advanced chip production field because of the high costs of machines and R&D.

According to Nikkei Asia, earlier this year, GlobalFoundries and UMC had discussed a merger to counter the increasingly fierce competition from China's growing traditional chip production (used in various electronic devices and automobiles).

Brady Wang, an analyst at Counterpoint, said that the biggest challenge for chipmakers like UMC looking to enter more advanced chip production is finding enough customers.

"The most urgent issue is whether you have enough customers to bear this capacity... This is a very critical point. Beyond that, there are also funding and technology development. I think they can overcome these challenges, and ultimately they won't be the biggest obstacles," said Wang.

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