United Microelectronics Corporation (UMC), Taiwan's second-largest contract chipmaker, announced the start of mass production of silicon photonics wafers at its Singapore facility, marking a strategic move to cater to the increasing demand for high-speed optical interconnects essential for AI and hyperscaler data center networks.
This initiative was developed in collaboration with SILITH Technology, a local fabless chip design firm, and took 18 months to transition from development to production readiness. UMC plans to further enhance its offerings by making a 12-inch silicon photonics platform available for customer product development by 2027.
Analysts at Citi have expressed optimism regarding UMC's prospects, forecasting a 13% increase in quarter-on-quarter sales for the second quarter of 2026, alongside a recovery in gross margins.
This positive sentiment is supported by UMC's recent financial results, which showed a 22.85% year-on-year increase in June sales to NT$23.12 billion ($719.21 million) and an 11.28% rise in cumulative sales for the first half of the year. Despite this strong performance, UMC's stock experienced a nearly 5% decline during Tuesday's trading session, ultimately closing 1.6% lower.
UMC's expansion in Singapore aligns with a broader trend among Taiwanese tech companies establishing a manufacturing presence in the city-state, which is emerging as a key hub in the global semiconductor supply chain.
The silicon photonics market is projected to grow significantly, reaching an estimated $3.71 billion by 2026, driven by increasing data traffic and the demand for faster optical communication