UMC to enter joint venture agreement for a 12” Fab in China

Based on the agreement, United Microelectronics Corporation (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 USD 1.35 billion in the next five years, with funding starting in 2015 deployed in installments based on the progress of the joint venture. 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.