United Microelectronics Corp (UMC, ??), the nation’s No. 2 contract chipmaker, yesterday said it is to ship its first 14-nanometer chips to clients later this quarter, catching up to rivals in supplying the advanced chips mainly used in premium smartphones.

“Our [14-nanometer] yields have fulfilled customer requirements and we anticipate 14-nanometer wafer shipments to commence in the first quarter of 2017, highlighting our determined efforts to reach this important milestone,” UMC chief executive officer Yen Po-wen (???) told investors yesterday.

Numerous customers have contacted UMC for its 14-nanometer chips, Yen said.

He declined to forecast revenue contribution from 14-nanometer chips, the company’s most advanced chips.

UMC rival Taiwan Semiconductor Manufacturing Co (TSMC, ???) beat competitors by shipping its first 16-nanometer chips about one-and-a-half years ago.

Mass producing 14-nanometer chips opens the door for UMC to manufacture more advanced 28-nanometer chips in China.

The chipmaker plans to file an application with the authorities to manufacture 28-nanometer chips in its new plant in China’s Xiamen later this year, Yen said.

The plant in China makes 40-nanometer chips.

That will help UMC increase 28-nanometer chip capacity by about 10,000 wafers a month, with half of it coming from Taiwan and the other half from China, the chipmaker said.

UMC considers 28-nanometer chips a major growth driver for the company.

However, revenue contribution from 28-nanometer chips is expected to fall to mid-teens percentage this quarter, from 22 percent last quarter, as demand dips briefly, before picking up in the middle of this year, Yen said.

Lower capacity utilization rate for 28-nanometer chips, along with a seasonal slowdown, will erode the gross margin to mid-teens percent this quarter, compared with last quarter’s 22.9 percent, Yen said.

Wafer shipments this quarter are expected to only drop by 1 percent from last quarter, thanks to robust demand for 40-nanometer chips and some less-advanced micro-controller units for home appliances, Yen said.

Average selling this quarter price would drop 3 percent from last quarter, he said.

“Looking into the first quarter of 2017, as we enter early year seasonality, we expect a sequential decrease in our foundry business. For full year 2017, UMC will continue to work toward a year of growth and prosperity,” Yen said.

UMC’s revenue this year will grow at a similar pace with the global semiconductor industry’s 5 percent annual growth rate, Yen said.

By: DocMemory
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