UMC trims fab spending in 2001, but pushes ahead in 300-mm
By Mark LaPedus
Semiconductor Business News
(01/23/01 13:32 p.m. PST)
SUNNYVALE, Calif. -- Taiwan's United Microelectronics Corp. (UMC) projects that its worldwide sales jumped 67% to about $3 billion in 2000, but the company plans to cut its capital expenditures by 10-to-15% for 2001.
Citing a slowdown in the worldwide semiconductor market, the Hsinchu-based silicon foundry giant will lower its overall capital expenditures to $2.6 billion in 2001, down from $2.9 billion in 2000. Originally, UMC projected its total capital expenditures would be relatively flat for 2001.
The world's second-largest pure-play foundry intends to slow its 8-inch wafer fab expansion plans in 2001, but it will continue to move full speed ahead in the 300-mm arena, said Jim Ballingall, vice president of marketing of UMC's U.S. subsidiary in Sunnyvale.
"We're going to cut back on our 8-inch [fab] expenditures," Ballingall said. "But in the 300-mm areas, we are expanding as planned."
The disclosure comes as no surprise to analysts. After a period of huge expansion in the 8-inch fab arena, UMC and its main foundry rival--Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC)--are in a race to ramp up their new and more advanced 300-mm fabs this year.
At the same time, silicon foundry vendors are also preparing themselves for a slowdown in the worldwide semiconductor business in 2001. Dataquest Inc., for example, recently lowered its growth forecast for the worldwide foundry business from 35% to 10% in 2001.
As a result, UMC and other foundry providers are putting on the brakes in their capital expenditures for 2001, observed analyst George Burns, who tracks worldwide fab capacity for Strategic Marketing Associates Inc. in Santa Cruz, Calif.
UMC's Ballingall said his company has seen some softening in the market because of inventory concerns. "But in 2001, we should grow faster than the semiconductor industry as a whole," he added.
The foundry vice president denied reports that UMC is slashing its wafer prices to select customers, following a sudden drop in its overall fab utilization rates. But he did acknowledged that wafer prices from UMC and its competitors could come under pressure in the second half of this year.
"There has not been any pressure on prices for the last seven or eight quarters," Ballingall said. "But in the second half, you will see some pressure on pricing for newer technologies [like 8-inch wafers at 0.25-micron and below]. In the past, those prices have been pretty firm."
Overall, UMC remains upbeat about 2001, especially after experiencing a banner year in 2000. The company projects its sales jumped from $1.8 billion in 1999 to about $3 billion in 2000.
And Taiwan's No. 2 foundry will continue to expand its capacity, especially in the 300-mm front. In fact, UMC has no less than three 300-mm projects in the works right now.
Early last month, for example, Trecenti Technologies Inc.--the joint silicon wafer foundry venture in Japan between Hitachi Ltd. and UMC--set a major milestone by announcing that it has produced the first chips in its 300-mm fab. That was two months ahead of its original schedule. Volume production at Trecenti is expected to begin in March 2001 (see Dec. 4 story).
A few weeks later, UMC and Munich-based Infineon Technologies AG announced a joint-venture 300-mm fab Singapore. The total capitalization of the venture is $3.6 million, and groundbreaking for the fab is slated for the first quarter of 2001 (see Dec. 14 story).
Closer to home, UMC is also building a new 300-mm fab in the southern Taiwan city of Tainan.
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