UMC approves about $3.2 billion more for fab expansion as utilization reaches 92%

United Microelectronics Corporation (NYSE: UMC; TWSE: 2303), the Taiwanese contract chipmaker known as UMC, said its board approved an additional capital expenditure budget of about US$3.2 billion, as third-quarter fab utilization reached 92%, according to its results announcement filed with the SEC.

What happened

UMC reported third-quarter revenue of NT$74.24 billion (US$2.32 billion), up 8.0% from NT$68.73 billion in the second quarter and up 25.6% from a year earlier. Gross margin was 34.0% and operating margin 25.1%. Net income attributable to shareholders of the parent was NT$16.43 billion (US$514 million), or NT$1.32 a share.

Wafer shipments grew 7.3% to more than 1.2 million 12-inch equivalent wafers, a record, UMC said. Jason Wang, UMC's chief executive, said in the release that several 12-inch fabs were operating at full capacity while 8-inch operations "also saw a strong recovery."

Wafers made on 22 and 28 nanometer processes were 35% of revenue. The 22 nanometer process alone reached a record 18.3% of wafer sales, which Wang attributed to customers taping out new products including display drivers, automotive radar and Wi-Fi chips.

The capacity decision

The board's additional budget is separate from UMC's stated 2026 capital spending guidance of US$2.0 billion. Wang described it as enabling the company "to accelerate our expansion schedule as we continue to align with customers on their product roadmaps and requirements."

In a separate filing the same day, UMC said its board approved a capital budget execution of NT$102,781 million, funded from working capital, for the stated purpose of capacity deployment.

Wang said demand for advanced packaging and silicon photonics, which UMC counts among its new business areas, had increased significantly. He said the company was "in the process of converting some existing capacity to address near-term unfulfilled demand." He called UMC's dual-track expansion plan in Singapore and Tainan "crucial" to keep capacity growth in step with customer needs.

Why it matters

Utilization, the share of installed capacity in use, was 92% in the quarter, and the company expects it to stay in the low-90% range in the fourth quarter.

Operating income rose 24.7% from the second quarter, the company said, faster than the 8.0% rise in revenue. For the first nine months of 2026, operating revenue totaled NT$204.0 billion and basic earnings were NT$6.00 a share, according to the company's board-approved financial statements announcement.

The release does not say which customers or end markets drove the silicon photonics and packaging demand, and it gives no revenue figure for either business.

What to watch

UMC's fourth-quarter guidance calls for wafer shipments up by a low-single-digit percentage, dollar average selling prices that remain firm, a gross margin comparable to the third quarter's 34.0%, and utilization in the low-90% range. The announcement gives no date for the next quarterly results.

Guidance is the company's own estimate and can change with customer orders and exchange rates.