UMC: AI Demand Strong, Q3 Wafer Shipments to Rise
According to United Microelectronics Corporation (UMC), the company shared an optimistic outlook for the second half of 2026 during its earnings conference on July 29, expecting wafer shipments to increase by a high single-digit percentage in the third quarter compared with the previous quarter. UMC also forecast that capacity utilization could exceed 90%, while gross margin is expected to remain at the mid-30% range. The company emphasized that demand for mature and advanced specialty processes, including 40nm and FinFET technologies, remains strong, with no signs of slowing AI-related demand.
Driven by long-term growth opportunities in artificial intelligence (AI), edge computing, and related applications, UMC announced that it will increase its 2026 capital expenditure budget from the previously planned $1.5 billion to $2 billion. The company will also accelerate expansion through a dual-site growth strategy involving its Singapore P4 facility and a new wafer fab project in Tainan, Taiwan, aiming to prepare for future demand growth.
UMC President and CEO Jason Wang said third-quarter performance is expected to benefit from stronger demand for power management ICs, sensors, and microcontrollers. Wafer shipments are projected to grow at a high single-digit rate, with the company’s 8-inch wafer business continuing to recover and utilization rates improving significantly. Meanwhile, 12-inch wafer capacity remains at a healthy level. The company expects its average selling price (ASP) in U.S. dollar terms to remain stable and will continue maintaining pricing discipline and profitability targets rather than sacrificing margins for market share expansion.
Wang noted that AI demand is expanding beyond computing chips and is creating additional opportunities across memory interconnects, power management ICs, and other semiconductor components. Although the notebook and smartphone markets are still recovering, AI adoption has already begun driving growth in both mature-node and specialty semiconductor manufacturing.
To meet increasing customer demand, UMC’s board of directors approved a phased expansion plan covering both Singapore and Taiwan. The company will expand cleanroom capacity at the Singapore P4 facility and begin construction of the building structure for a new wafer fab in the Tainan Science Park. UMC said the P4 facility’s building shell has been completed, with future investments focused on cleanroom construction and equipment installation to expand silicon photonics manufacturing capabilities. The Tainan facility will serve as the foundation for future P7 and P8 fabs, supporting long-term product roadmaps and technology development with customers.
UMC Chairman Hong Chia-Chung stated that the phased expansion approach is designed to balance speed, flexibility, and capital discipline while meeting customer demand. The strategy will also help reduce initial depreciation pressure and strengthen the company’s competitiveness in the AI era.
Hong added that the new Tainan fab will further reinforce Taiwan’s role as UMC’s global manufacturing and advanced research hub while expanding the company’s advanced packaging capabilities. Meanwhile, the Singapore P4 facility will strengthen its position as UMC’s largest overseas manufacturing base, improving supply chain diversification and operational resilience while accelerating the development of advanced technologies such as silicon photonics.
UMC recently completed the tape-out of its first customer’s 12-inch silicon photonics IC platform. The platform is expected to become available to general customers in 2027, with multiple new product projects currently under discussion. UMC believes silicon photonics will become an important growth driver for the company in the coming years.
