Taiwan's UMC to spend $5 billion on new chip plant in Singapore

FILE PHOTO: The signboard of United Microelectronics Corp (UMC) is seen in Xinchu, the south city of Taipei, Taiwan January 10, 2006. REUTERS/Richard Chung/File Photo

TAIPEI (Reuters) - Taiwan's United Microelectronics Corp (UMC) will invest $5 billion on a new microchip factory in Singapore, with production expected to start in 2024 to support the boom in 5G and auto electronics, it said on Thursday.

UMC, which has already been producing semiconductors in the country for more than 20 years, said the new factory would produce 22 and 28 nanometre chips.

"The new fab is backed by customers who have signed multi-year supply agreements in order to secure capacity from 2024 and beyond, which points to robust demand outlook for UMC's 22/28nm technologies for years to come, driven by 5G, IoT (internet of things), and automotive mega-trends," it said in a statement.

The new fab will be next to an existing one, and will have a monthly capacity of 30,000 wafers, UMC added.

The company said in 2021 it would spend T$100 billion ($3.57 billion) over the next three years to expand capacity and would guarantee supplies and prices to its clients as part of the plan, amid a global chip shortage that has hit automakers especially hard.

UMC Chairman Stan Hung said in the statement the semiconductor "undersupply" had crystallised the need for "greater visibility and mutual risk mitigation within the industry".

"We are committed to doing our part to restore balance in the industry value chain and to the long-term success of our customers."

The company's clients include Qualcomm Inc and Germany's Infineon.

The global chip shortage initially forced automakers to cut production but is now also hurting manufacturers of smartphones, laptops and even household appliances. Chip firms are racing to add capacity to keep up.

TSMC, Asia's most valuable listed firm and globally the largest contract chipmaker, said last month it expected to lift capital spending to between $40 billion and $44 billion this year. Last year it spent $30 billion.

($1 = 27.9840 Taiwan dollars)

(Reporting by Ben Blanchard; Editing by David Goodman and Mark Potter)