Taiwan-based semiconductor foundry UMC announced its third-quarter (July–September) results on October 28, 2026, and said it had approved an additional capital expenditure budget of about US$3.2 billion. To meet growing demand for advanced packaging and silicon photonics, the company plans to redirect part of its existing production capacity in the short term, and to expand in Singapore and Tainan, Taiwan, over the longer term.
Company-wide utilization rose to 92% in the third quarter, but according to UMC, demand in the new segments remains unmet. The point at which the additional budget is approved is not the same as the point at which new equipment actually increases supply. The company's separate cash-basis capex plan for full-year 2026 is US$2 billion, and the two figures need to be read as distinct.
Utilization at 92%, operating income up 24.7% quarter on quarter
Third-quarter consolidated revenue was NT$74.24 billion, up 8.0% from the previous quarter and up 25.6% from a year earlier. Wafer shipments, in 12-inch equivalents, rose from 1,129,000 in the previous quarter to 1,212,000, up 7.3% quarter on quarter and a record high. A 12-inch equivalent converts wafers of different diameters into the number of 12-inch wafers with the same surface area.
Company-wide utilization climbed from 85% in the previous quarter to 92%. CEO Jason Wang said demand was solid across end markets, that several 12-inch fabs were running at full capacity, and that the 8-inch fabs had recovered. The fabs described as fully loaded are several, not all.
On earnings, operating income rose 24.7% quarter on quarter to NT$18.64 billion, and gross margin was 34.0%. Net income attributable to shareholders of the parent was NT$16.43 billion, up 9.7% from a year earlier but down 61.1% from the previous quarter.
The movement is easier to read if operating income and non-operating items are separated. Non-operating income shrank from NT$30.236 billion in the previous quarter to NT$1.268 billion, and within that, net investment gains fell from NT$30.045 billion to NT$1.159 billion. Operating income from the core business grew, while the contraction in non-operating items showed up in the bottom line. The financial figures do not identify the cause of any individual transaction.
22nm reaches 18.3% of wafer revenue
By process technology, 22nm alone accounted for 18.3% of wafer revenue, a new record. For its 22/28nm business, UMC says design tape-outs are progressing for display driver ICs (DDI), automotive radar, and Wi-Fi ICs. DDIs are the chips that drive what appears on a screen.
The combined share of 22nm and 28nm in wafer revenue fell from 37% in the previous quarter to 35%. Even so, the company describes revenue from its 22/28nm business as a record. Because a share is a proportion of the total, a lower percentage alone does not mean the revenue amount for that business declined.
The denominator here is wafer revenue, which differs from consolidated revenue. Revenue and profit contributions from advanced packaging and silicon photonics individually have not been disclosed. The growth in consolidated revenue cannot be directly tied to results in the new segments.
Reading the $3.2 billion approval and the $2 billion 2026 spend separately
A company-wide utilization rate of 92% can coexist with several fabs running at full capacity and with unmet demand in the new segments. Even if the company-wide average leaves some room, that room does not necessarily match the capacity needed for a particular product or use. The remaining 8% does not mean spare capacity usable for any order.
According to CEO Wang, the company is redirecting part of its existing capacity to address near-term unmet demand in advanced packaging and silicon photonics. Advanced packaging is a technology for making chip interconnection and assembly more sophisticated, and silicon photonics is a technology for forming optical circuits on silicon. The scale of the capacity being redirected is not stated in the earnings report.
Over the longer term, UMC will pursue expansion in Singapore and Tainan. The company explained that it approved the additional capex budget of about US$3.2 billion in the context of pulling forward its future expansion schedule to match customers' product plans. The approved amount alone does not allow a calculation of supply growth within the year.
| Metric | Figure | Scope / period | What can be read from it |
|---|---|---|---|
| Approval of additional capex budget | About US$3.2 billion | Additional approval dated October 28, 2026 | Budget for future expansion. Allocation across years not stated |
| Cash-basis capex plan | US$2 billion | Full year 2026 | Annual cash spending plan. Covers a different scope from the additional approval |
| Company-wide quarterly production capacity | Q3: 1,325,000 wafers; Q4 forecast: 1,337,000 wafers | 12-inch equivalent wafers, per quarter | Estimate based on maximum output. Differs from shipments |
The source is pages 2 and 9 of UMC's third-quarter earnings report. The capacity estimates may change in practice depending on equipment delivery, process transitions, and other factors.
The $3.2 billion is an additional capex approval, the $2 billion is the 2026 cash spending plan, and 1,337,000 wafers is the fourth-quarter quarterly capacity outlook. The three differ in scope and timing. The report does not state over how many years the $3.2 billion will be spent, how much will go to Singapore versus Tainan, or when the new equipment will come online. It would not be appropriate to add the two dollar figures together as 2026 investment, or to attribute the entire fourth-quarter capacity increase to this approval.
Fourth quarter: higher shipments and low-90% utilization expected
For the fourth quarter (October–December), UMC expects wafer shipments to grow at a low-single-digit rate quarter on quarter. It forecasts a solid U.S. dollar average selling price, a gross margin roughly in line with the previous quarter, and company-wide utilization in the low 90% range. These are the company's outlook, not actual results.
How much the near-term capacity redirection and the future site expansions will each contribute to supply in the new segments cannot be measured from the current figures alone.
The next indicators to watch are when the expanded facilities come online and how the response to the new segments shows up in actual supply and earnings. If UMC discloses the scale and timing, it will be possible to measure more concretely the distance between the approval of the additional budget and actual output growth.