Taiwan’s No. 2 Chip Maker Teams Up With Car Parts Giant To Make Semiconductors In Japan

UMC, Taiwan’s No. 2 contract chip maker after TSMC, is pairing up with Toyota-backed car-parts supplier Denso to make semiconductors in Japan and meet growing global demand in the automotive sector.

United Semiconductor Japan Co. (USJC), UMC’s Japanese subsidiary, announced late last month that it is building a production plant for power chips that control the flow and direction of electric current with Denso, which is part-owned by the world’s largest car maker by sales.

“Semiconductors are becoming increasingly important in the automotive industry as mobility technologies evolve, including automated driving and electrification,” Denso president Koji Arima said in the announcement. “Through this collaboration, we contribute to the stable supply of power semiconductors and electrification of automobiles.”

“It should be positive news,” says Brady Wang, Taipei-based associate director with market research firm Counterpoint Research. UMC is already positioned to do “third-generation” semiconductors, including energy-saving kinds with the right thickness for automotive use. Wang expects high-volume production for the Japanese auto market. “Both of their advantages can be put into play,” he says.

An insulated-gate bipolar transistor—also known as IGBT, which is used for electric vehicle motor controllers—line will be installed at USJC’s wafer fab. It will be the first in Japan to produce IGBTs on 300mm wafers, according to the announcement. Denso will contribute its system-oriented IGBT device and process know-how, while USJC will provide its 300mm wafer manufacturing capabilities.

Other chip makers, including TSMC, can manufacture with IGBT technology, but Japanese companies dominate much of the market, notes Joanne Chiao, an analyst with Taiwan-based research firm TrendForce.

The UMC-Denso plant, in Mie Prefecture in central Japan, is scheduled to start in the first half of next year. A spokesperson for UMC said the plant will be able to produce 10,000 wafers a month by 2025.

“With our robust portfolio of advanced specialty technologies and [International Automotive Task Force] IATF 16949 certified fabs in diversified locations, UMC is well placed to serve demand across auto applications, including advanced driver assistance systems, infotainment, connectivity, and powertrain,” Jason Wang, UMC co-president, said in the announcement. “We look forward to capitalizing on more cooperation opportunities going forward with top players in the automotive space.”

Since automotive production restarted around the world in late 2020, after the first wave of the pandemic, factory demand for automotive chips has grown and remains strong because of “pent-up consumer demand” for EVs and hybrids, Moody’s Investors Service said in an emailed commentary.

The automotive semiconductor market is estimated to grow from $35 billion in 2020 to $68 billion in 2026, Taipei-based Market Intelligence & Consulting Institute says.