UMC: ASP will increase by 10% annually next year, and AI revenue will account for more than 25% in 2029

Wafer foundry UMC (2303) held a press conference today. UMC CEO Wang Shi is optimistic that this year’s growth momentum will continue to 2027, and the average unit price of comprehensive products in 2027 (blended ASP) is expected to grow by 10% annually. This year's AI-related revenue is estimated to be close to US$300 million, covering power management, connection chips, FPGA, advanced packaging and silicon photonics. It is expected to continue to grow rapidly in the next three years. AI revenue will account for more than 25% of total revenue in 2029, with total revenue at 20 Based on 29 years, the goal is higher than the previous plan of AI revenue exceeding US$1 billion within three years. Silicon Photonics is expected to gradually increase its volume in 2027, and advanced packaging will expand its revenue contribution in 2028. Even if new depreciation is taken into account, the gross profit margin of the new business is still estimated to be higher than the current overall average.

In response to customer demand this time, UMC has added an additional capital budget of approximately US$3.2 billion. The planned monthly production capacity for silicon photonic integrated circuits (PIC) is approximately 18,000 pieces, mainly in Singapore; the monthly production capacity for deep trench capacitors (DTC) and silicon capacitors is approximately 22,000 pieces. Central Tainan; The monthly production capacity of thin film lithium niobate (TFLN) modulators is about 20,000 pieces, which is configured in an 8-inch production line. It is expected to start installation at the end of 2028, gradually expand in 2029, and reach the planned scale in 2030. It is still coordinating with equipment manufacturers to accelerate delivery and installation.

UMC pointed out that the 1.6T optical transceiver platform has made progress in cooperation with a number of large cloud players, and DTC has also continued to promote customer verification and production capacity planning. Currently, the demand for AI infrastructure is growing faster than production capacity, and it has not yet expanded production ahead of the market. It will be built in stages according to customer commitments, product schedules and needs, and will observe new supply from peers. Even if the existing plan is completed, the expected demand is still higher than the supply capacity.

In terms of pricing strategy, the pricing environment is expected to improve in 2027. Supply and demand for some of UMC's 8-inch and 12-inch processes have become tight. Demand for AI power management and FPGA exceeds existing production capacity. Orders continue to increase. Product portfolio upgrades, rising raw material costs, and depreciation of new investments have also prompted price renegotiation. UMC has begun price negotiations with customers since the third quarter, and is confident that the overall ASP will increase by 10% annually in 2027.