Received Samsung OEM order, UMC continued to make progress in differentiated transformation of its full-load process route
On November 19, there was news in the industry that UMC won a 28-nanometer 5G smart phone image system processor (ISP) order from Samsung LSI and will begin mass production next year. In addition, UMC will also manufacture 28-nanometer OLED panel driver ICs for South Korea's AnaPass, 40-nanometer OLED panel driver ICs and 80-nanometer TDDI for South Korea's Magnachip, both of which are Samsung's main chip supplier for OLED panels. A series of news shows that UMC has been making progress in strengthening its mature technology market and implementing a differentiated transformation strategy since 2017. In the future, UMC's profit performance will further improve.
Successful market transformation and better performance
Recently, it was reported that UMC has won new orders for OLED panel driver ICs and integrated touch function panel driver ICs (TDDI), including the 28-nanometer OLED panel driver IC for South Korea's AnaPass and the 40-nanometer OLED for Magnachip in South Korea. Panel driver IC and 80nm TDDI. Because AnaPass and Magnachip are the main chip suppliers for Samsung OLED panels. This means that UMC has entered Samsung's supply chain.
Recently, it has been reported that Samsung's LSI design ISP has recently completed the design finalization and will be handed over to UMC in the first quarter of next year. The quarterly production volume is about 20,000. As Samsung and its chip supply chain, UMC, successively release new 28-nanometer or 40-nanometer orders, UMC's 8-inch and 12-inch capacity utilization rates will continue to increase, and it is expected to reach full load in the first quarter of next year.
In addition, UMC completed a 100% merger with Japan ’s Mie Fujitsu Semiconductor ’s 12-inch wafer fab on October 1, allowing UMC to exceed 10% of the wafer foundry market and return to the world ’s second largest factory throne. The off-season is not off. A series of dazzling results show that UMC's previously launched market transformation strategy is achieving results.
In July 2017, UMC began to adopt the common general manager system. The newly succeeded Wang Shi and Jian Shanjie made major market strategy adjustments, gradually faded out the advanced process competition, and turned to the advantages of mainstream logic and special process technology to strengthen the Development of mature and differentiated process markets. The above situation shows that UMC's market strategy focusing on mature and differentiated processes is succeeding. This will have positive benefits for next quarter and next year's profit.
According to the third quarter financial report, UMC is optimistic about the outlook for the fourth quarter, including the rebound in demand for radio frequency ICs, OLED panel driver ICs used in 5G smartphones, and power management ICs for computer peripherals and solid state drives (SSDs). In addition to increasing the contribution of new factories in Japan, wafer shipments in the fourth quarter are expected to increase by 10% compared to the previous quarter, and capacity utilization is close to 90%. UMC's consolidated revenue in the fourth quarter is expected to increase by 10% quarterly, which is expected to hit a record quarterly revenue.
This transformation of UMC has also been recognized by the capital market. Morgan Stanley analyst Zhan Jiahong said in a July report that UMC was "spending money in the right place" and raised UMC's investment rating; UBS (UBS) also gave a buy rating.
Mainland China market will be a strong support
The Chinese mainland market is also very important for UMC's transformation and development. According to data from research firm Gartner, the global semiconductor output value in 2019 is $ 429 billion. Mainland China has always been the world's largest semiconductor market, accounting for about one-third of global market demand. At the same time, there is a huge gap in wafer manufacturing capacity in mainland China. According to a report from the state technology group, the local satisfaction ratio of China's integrated circuit design industry's foundry demand has been below 40% from 2016-2022, and reached a low of 30% in 2018. According to the estimates of Jibon Consulting, if 50% of the integrated circuits used in the Chinese market are manufactured locally (including IDM and Foundry, excluding storage). By 2022, the manufacturing capacity gap for processes above 90nm will be 200,000 (12 inches), the manufacturing capability gap for 28nm-90nm (including 90nm, not including 28nm) will be 150,000, and the gap for 28nm and below will be 300,000.
Under such circumstances, UMC attaches great importance to the Chinese mainland market and continues to invest in the development of the Chinese market. Lin Weisheng, deputy general manager of Hejian Chip, previously said in an interview with reporters that UMC's development strategy is still to prioritize the company's overall profit and market share. In Mainland China, UMC has established a 12-inch wafer foundry integrated with Lianxin, a joint venture with the Xiamen Government and Fujian Electronic Information Group. UMC also has 8-inch factories in mainland China to support mature and unique processes. UMC will make related products smaller in size, lower in power consumption and higher in performance to meet market demand.
It is understood that due to strong market demand, UMC's Suzhou Hejian 8-inch factory and Xiamen Lianxin 12-inch factory have full capacity, and demand exceeds supply. The industry is optimistic about the demand for the Internet of Things, artificial intelligence, communications, and consumer electronics in the Chinese mainland market. It is expected that this demand will further increase in the future and will provide strong support for UMC's transformation and development.
Editor-in-chief: Chen Bingxin