UMC Shrinking it’s Chip Making Project amid US China Trade Tensions

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World’s third largest chipmaker, Taiwan’s United Microelectronics Corp. is scaling down its dynamic random access memory (DRAM) project Fujian Jinhua. The company recently moved 140 employees of 300 staffer DRAM project internally to other departments. The move is significant when the project is in a suspension mode since November 2018 when USA banned all supplies to the company accusing it of stealing Micron’s Intellectual property and for indulging in economic espionage activities in collaboration with the Chinese government.

Fujian Jinhua project is backed by the Chinese government in a bid to achieve self-sufficiency in chip making business heavily monopolized by South Korea based companies including Samsung Electronics, S K Hynix and USA’s Micron. The three companies control around 96% of chip making business. The project was aimed at achieving self-reliance funded only by central and state government funds. UMC in late 2016 announced a technology partnership with Fujian Jinhua to help develop DRAM technology.

The project with massive investment of $5.6 billion is based Jinjiang, a city in Southern China. The project was due to enter production trial in December 2018, but ban by USA threatened UMC’s chip making business which relies heavily on American supplies for semiconductor equipments such as Lam Research and Applied Materials. The supplies to the semiconductor chip making company was halted by USA on the charge of intellectual property rights violations of Micron. The crackdown is aimed to smother China’s technology ambitions and punish the Asian giant for IPR appropriation which is major bone of contention between the two economic superpowers.

UMC although has refused to declare the winding up of the project explicitly in fear of angering the Chinese government. The internal transfers is regular exercise and had nothing to do with the project claimed the chief financial officer of UMC Liu Chi-Tung. He declined to comment further on the matter.

Equipments worth US$980 million purchased by Fujian Jinhua lie at UMC’s Tainan site after the project was temporarily halted by USA block.

Employees of the DRAM team have already started looking for new jobs as they feel UMC is planning to ditch memory chip development business altogether. The company is stuck between the US China trade war. Although the prospects for the business were good, the tensions between the two giant economies is harming the company.

UMC is in mainly in the business of making chips for graphics processors, Wi-Fi and Bluetooth chips, mobile processors and automotive chips. The company serves clients such as MediaTek, Qualcomm, AMD, Novatek, Infineon, Realtek and Rockchip and Allwinner Technology.

About Abhishek Budholiya 101 Articles
Abhishek Budholiya is a tech blogger, digital marketing pro, and has contributed to numerous tech magazines. Currently, as a technology and digital branding consultant, he offers his analysis on the tech market research landscape. His forte is analysing the commercial viability of a new breakthrough, a trait you can see in his writing. When he is not ruminating about the tech world, he can be found playing table tennis or hanging out with his friends.