In January 2024, UMC announced a surprise partnership with Intel to develop and manufacture a 12nm process platform—an area where Chinese foundries have struggled to gain traction. The project will be housed in Intel’s Ocotillo campus in Arizona, using Fabs 12, 22, and 32, with foundry services expected to launch in 2027.
For Intel, whose CPUs rely on cutting-edge nodes, these 12nm lines are considered legacy. In the past, such lines were either upgraded or phased out. Now, the UMC partnership offers a way to monetize underutilized assets. “It’s a symbiotic deal,” one foreign equity analyst told me. “Intel needs utilization, UMC needs capacity.”
Over the past year, Taiwanese engineers traveling to Arizona haven’t all come from TSMC. UMC has dispatched some engineers of its own, frequently seen at Intel’s Phoenix-area campuses.
UMC CFO and spokesperson Chi-Tung Liu confirmed in May that nearly all of the company’s critical R&D efforts are now centered on the 12nm platform, which is currently in the customer onboarding phase.
According to a source familiar with the program, the partnership brings three major advantages.
1. 12nm is the most advanced node that doesn’t require EUV lithography, making it a sweet spot in terms of price-performance. “Many customers stick with 12nm simply because it’s more cost-efficient,” the source said.
2. The node falls under U.S. export controls, making it significantly harder for Chinese foundries like SMIC to obtain the necessary equipment and EDA tools. This allows 12nm to act as a defensive buffer as China scales its mature-node output.
3. While UMC publicly positions the Intel collaboration as a hedge against China, “deep down, it’s about grabbing market share from TSMC,” the source said. “TSMC essentially owns the 12nm space. GlobalFoundries doesn’t offer T-like (TSMC-compatible) processes, so its only 12nm customer is AMD.”
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For Intel, whose CPUs rely on cutting-edge nodes, these 12nm lines are considered legacy. In the past, such lines were either upgraded or phased out. Now, the UMC partnership offers a way to monetize underutilized assets. “It’s a symbiotic deal,” one foreign equity analyst told me. “Intel needs utilization, UMC needs capacity.”
Over the past year, Taiwanese engineers traveling to Arizona haven’t all come from TSMC. UMC has dispatched some engineers of its own, frequently seen at Intel’s Phoenix-area campuses.
UMC CFO and spokesperson Chi-Tung Liu confirmed in May that nearly all of the company’s critical R&D efforts are now centered on the 12nm platform, which is currently in the customer onboarding phase.
According to a source familiar with the program, the partnership brings three major advantages.
1. 12nm is the most advanced node that doesn’t require EUV lithography, making it a sweet spot in terms of price-performance. “Many customers stick with 12nm simply because it’s more cost-efficient,” the source said.
2. The node falls under U.S. export controls, making it significantly harder for Chinese foundries like SMIC to obtain the necessary equipment and EDA tools. This allows 12nm to act as a defensive buffer as China scales its mature-node output.
3. While UMC publicly positions the Intel collaboration as a hedge against China, “deep down, it’s about grabbing market share from TSMC,” the source said. “TSMC essentially owns the 12nm space. GlobalFoundries doesn’t offer T-like (TSMC-compatible) processes, so its only 12nm customer is AMD.”
Intel’s Gamble: Bringing in UMC to Tap into Taiwan’s Secret Sauce
Liang-rong Chen
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