Taiwan’s Other Semiconductor Giant

United micro Electronics Corporation or UMC was taiwan's first Semiconductor Company and like with many first-born sons it was born with a Golden Spoon in its mouth but the company met its great early expectations and aggressively competed with his younger sibling tsmc for many years and even today it Remains the third largest semiconductor Foundry in this video let's take a look at taiwan's other semiconductor manufacturing Giant but first sign up for the asianometry newsletter check out the newsletter to read the entire scripts for previously released videos including those you might not have seen before along with some additional commentary the sign up link is in the video description below I try to put one out every week maybe two alright back to the show I covered some of the story in a previous video about how Taiwan created tsmc feel free to watch that one too the story diverges later on but I will try to keep it fresh and new in the 1970s Taiwan faced New Economic challenges its single biggest export category was textiles but import quotas and international competition limited that industry's future taiwan's electronics Industry was then its second largest export category however most of that industry still consisted of low value Electronics assembly operations various Taiwanese who spend time in the United States pushed for taiwan's economy to Pivot towards integrated circuits the government studied previous technology transfer situations and when they failed they determined that the most common reasons for failure were insufficient r d investment lack of peripheral support after the transfer and untrained personnel so the government set up the industrial technology Research Institute or Eatery to thoroughly acquire introduce and transfer new technologies to the Private Industry that would oversee the whole process like a project manager eachery set up a committee to select several high potential Technologies to bring to Taiwan the committee selected complementary metal oxide semiconductors or CMOS an emerging technology also being adopted by the Japanese at the time they then also acquired a 7.5 Micron CMOS technology from RCA this was behind the three Micron Leading Edge being used in the United States but it was also reliable and quite mature in May 1976 Taiwan sent 35 to 40 individuals to RCA's plant for 6 to 12 months to learn this processed node RCA was in difficult Financial Straits at the time so they were very willing to teach what they knew for the right price in 1977 Eatery set up a small three-inch wafer demonstration Factory Under The Institute of electronics by December that year yields had reached 81 percent matching the original RCA Factory's performance that would have correlated at the time to a net profit rate of over 21 percent then a very high number for Taiwanese manufacturer from 1976 to 1980 Eatery spent 120 million USD to acquire IC design and Manufacturing Technologies from abroad soon thereafter they set about transferring its Acquisitions to the Private Industry thus came about UMC in late 1979 eachery set up a preparatory office for what would eventually be UMC taiwan's Premier vertically integrated Electronics manufacturer an integrated design company so to speak Atri upgraded the aforementioned demonstration Factory worth 410 million NTD from 7.5 microns to 3.5 microns it also expanded the Factory's wafer sizes to 6 inches they then transferred it and its employees to the company etry also invested Millions to introduce computer simulation programs for IC design to the company spice 2 CCAP and other industry standard design tools a tree even selected the products that UMC would sell they transferred IC design IP for 10 products including for telephones toys timers calculators and watches mostly items that the Taiwan electronic industry itself exported the Taiwan government then reached out to several large Taiwanese companies to get them to invest into UMC many of taiwan's biggest companies including China development financial or CDF Tico and the Taiwanese Bank of communications contributed 12.5 million USD UMC was also one of the first companies to apply and receive space in the shinchu Science Park shinchu would eventually become home to many of taiwan's advanced microelectronics companies as you might guess using the term spin-off seems to fall a bit short this was a complete Soup To Nuts transfer facilitated with all the resources of a nation-state due to the breadth and complexity of the transfer it took over three years to complete during its second year the company needed to assign a deputy general manager to help run things after Eugene dou the general manager found himself stretched between too many projects the roster of talents to choose from was large incredible talents who came back from the United States to contribute to Taiwan director of The Institute of electronics eventually chose as deputy director Robert Zhao sometimes goes by Bob and otherwise underen who grew up in Taichung Tau moved to Taipei as a student and lived in an informal House made from iron sheets a slum better to say it amidst cab drivers card pullers and the like Tao is a rare Taiwanese semiconductor Pioneer who never went to the United States for school he received a bachelor's from the national Taiwan University and a masters in management Sciences from National Chow Tong University in shinchu who chose Tao because he felt that Tau at that time just in his 30s was more suitable for managing a company more entrepreneurial in his attitudes and abilities and who was correct as leader of one of taiwan's two major semiconductor makers Bob Tao would play a prominent role in taiwan's rise to semiconductor dominance has the firstborn son UMC had everything set up for it and for that exact reason the pressure was on for them to succeed as a firstborn son myself I know the pressure of high expectations if UMC failed then that would snuff out the Taiwanese semiconductor initiative before it can reach its full potential UMC first began production in April 1982 and unfortunately it was a difficult time from the semiconductor industry the Taiwanese economy was in a recession and the company struggled to sell enough chips to customers as an IDM UMC can only sell customers their own eternally produced designs like I mentioned eachery had transferred IC designs for a few chip products but management wanted more at the close of 1982 UMC generated less than 5 million USD in revenue and turned a net loss but the next year things turned around over in the United States the at T Bell System Monopoly was breaking up this necessitated a large surge in ICS for new telephones and the Japanese could not meet the sudden mass of demand UMC answered the call at the right time and production surged six times over from four million pieces to 24 million pieces turning a substantial profit but this rapid export surge was only temporary and the next year UMC had to find more business for itself tsmc and UMC have long been Rivals this dates back to Tao's accusation that Morris Tang stole the independent Foundry idea and then prevented UMC from adopting the model until after tsmc was founded in 1984 after the end of the telephone boom Tau submitted an expansion plan in it he said that the industry was moving away from integrated design manufacturers every step was getting too complicated for any single company to master so he proposed an oem Foundry which would focus all of its resources ON Semiconductor manufacturing UMC would then invest in a variety of Taiwanese design houses to get them to bring their IC designs for UMC to manufacture kind of like a loose semiconductor Consortium this idea which Tao later tweaked sounds similar to though not quite exactly like the independent Foundry idea that Morris dung and tsmc pioneered the main difference was that Tao's proposal would only serve design houses that UMC invested in mostly favoring those in Taiwan Tang's dedicated Foundry would take on all comers according to Tau he showed the proposal to the ministry of economic Affairs Dr Katie Lee who had previously served as the Minister of Finance and is known as the father of taiwan's modern economy asked Sao to bring the proposal to Moore's tongue at this time Dr Zhang had just become president of General instrument a semiconductor manufacturer in New York Dr Tang had already then gained widespread respect in the Chinese Community for rising to the number three spot in Texas Instruments Tao sent the proposal to tang and had dinner with him but nothing came out of it shortly thereafter the ministry of economic Affairs dropped umc's expansion proposal Tao later claims that this was because Dr Zhang sent a letter to KT Lee saying that the proposal was unworkable Morris done for his part says that he has had his dedicated Foundry idea since his days at Texas Instruments he had proposed it to both Texas Instruments and Intel who turned it down hu ding Hua the director I mentioned earlier who first elevated bobtow adds some additional color behind the scenes the government strongly considered umc's proposal but opted to create a separate company tsmc ultimately officials had two major concerns first they felt that it would be easier to set up a dedicated manufacturer from scratch than it would be to convert an IDM into one they're thinking on this turned out to be correct UMC later discovered that becoming a Foundry not only meant big cultural changes but also working with their former competitors which those competitors did not want to do and second Taiwanese officials were concerned about possibly turning UMC into a state-backed monopoly like China's steel they wanted competition in their growing semiconductor industry of course arguing about who came up with what and when it came about is a bit of a silly matter the quote-unquote idea of an independent Foundry has been around long before either UMC or tsmc Carver Mead the Kyle Tech professor famous for revolutionizing blsi design proposed the concept of a fabrication facility all the way back in 1979. he called it a silicon press and then we have Moses launched in 1981 as an e-commerce service provider for American University students students taking a vlsi course can submit their designs to Moses who batch them together and Fab them it is like a mobile app everyone can come up with an idea for an app to share pictures with filters fewer people can actually execute on it and make Instagram ideas are cheap execute on them regardless of how it happened you can only imagine tau's frustration when tsmc opened its doors in 1987. to add to the insult of losing the first mover's Advantage UMC felt that the Taiwanese government gave its second child a sweeter deal during the transfer and founding this includes a larger amount of subsidies and a better process node The Sibling Rivalry between the two companies bubbled up and intensified has the Taiwan semiconductor industry took off in the late 1980s and 1990s at the start tsmc took orders from everyone except UMC the reasoning apparently being that tsmc felt that doing wafer manufacturing for UMC would allow the latter to Triple their capacity and take more share early on Morris Tang served as chairman of both UMC and tsmc then in 1991 Bob Tao and the other directors of the UMC board asked Zhang to resign in the name of competition avoidance Tang did and Tau himself became chairman then in 1995 UMC entered into a series of creative joint ventures with customers that allowed it to spin off their design firms into separate companies this eventually turned them into a dedicated Foundry like tsmc putting the two into direct competition one of those spin-offs mediatek would go on to become taiwan's largest fabulous company UMC chose to challenge tsmc for the semiconductor Crown but tsmc had an eight-year head start on its older sibling grabbing many of the larger customers that had been available customers that the giant was not really excited about sharing being the smaller Taiwanese semiconductor giant however meant that Tau and his company could take more entrepreneurial risk and act more flexibly if it helps conserve their limited capital for instance the creative joint venture structures in 1995 that eventually allowed the company to convert into an independent Foundry UMC has also been far more willing than tsmc to make Acquisitions and go overseas a notable acquisition was the 1998 takeover of Nippon steel struggling semiconductor division which they promptly turned around in a year this gave UMC a factory in Japan long before tsmc lacking the Big Rich customers that tsmc has UMC has had to resort to joint ventures with customers to raise the capital for their Fabs examples include Ventures with xilinx Hitachi and Infineon and finally UMC was one of the first Taiwanese companies to provide their employees with a stock bonus plan in order to attract better talents stocking options are a common occurrence in Silicon Valley but before UMC was rather rare in Taiwan business the idea has since been widely adopted it is good that UMC did all of this however it is all for naught unless UMC can keep up with tsmc technically if the company cannot maintain technology leadership then it would be relegated to Specialty Fab status from about 1993 onwards UMC managed to keep up with tsmc even despite a devastating fire in 1997 the two companies spend large amounts on R D to acquire the latest process nodes then in 1997 a mistake IBM announced their new copper interconnect technology to Great Fanfare this replaces the old aluminum wires between circuits with copper to help those wires more easily transmit electrical signals as things got smaller IBM brought the concept to tsmc and UMC seeking a technical cooperation as I mentioned in the liangmong song video tsmc rejected this cooperation and successfully engineered their own implementation of the concept for the 130 nanometer node UMC took the deal striking a cooperation agreement with IBM and Infineon to help create their 130 nanometer node it is here that I would like to make a correction to what I said in the Liang video I said back then that IBM's technology never left the laboratory that is incorrect the technology did indeed enter commercial markets what I meant to say was that IBM's copper interconnects turned out to be commercially uncompetitive tsmc successful launch of their 130 nanometer node skyrocketed the company ahead of the competition one major plaudits from the Taiwan government and increased its Revenue to 5 billion dollars and it was also umc's first major technical stumble however it was not a fatal blow and in fact UMC managed to launch the 90 nanometer node first in 2003 while tsmc was still on its 130 nanometer node but tsmc was lagging behind because they were working on mastering the next step in lithography technology immersion they launched the next year in 2004 quickly followed that up with 65 nanometers in late 2005 and then marched on to 45 nanometers in 2006. UMC struggled to keep up with this Relentless March they got to 90 nanometers first but their own 45 nanometer process node would not come about until early 2008. two years after tsmc tsmc stumbled on their 40 nanometer node which eventually among other things cost then CEO Rick Tai his job in June 2009 Morris dung returned to lead tsmc in the midst of the global financial crisis Tong brought the company back on track closely working on what would turn out to be an extremely impactful node 28 nanometers 28 nanometers is the last advanced process node still using a planar gate and is extremely difficult to achieve it Fabs had to make a critical manufacturing decision gate first or gate last the Deep technical details of this decision are quite Arcane but I'm going to try to give a decent summary a transistor has three parts a gate source and drain throughout semiconductor history Fabs produce the gate first before the source and the drain you then use that gate to help create the source and the drain then you go back to repair any damage that might have been done to the gate this is gate first but starting with the 45 nanometer process node the industry introduced a new type of gate the high K slash metal gate the abbreviation of this hkmg makes me think of Hong Kong anyway these are better at preventing electrons from leaking as they pass through the gate from the source to the drain the drawback of this new gate is at your old gate first method basically causes it to fall apart particularly during that repair stage so Intel who first commercialized the hkmg created a new process to deal with this gate last you make a sacrificial gate just for creating the source and drain then you destroy that sacrificial gate so that you can build the real gate after you finish making the source and the drain it sounds conceptually quite similar to gate first and it is but it radically changes the manufacturing process furthermore there are design implications for instance forcing all the gates to lie in the same direction this was not a simple decision anyway the gate for Earth and gate last manufacturing decision was the biggest Talk of the Town in those days the industry split into two paths Intel and tsmc chose to make the switch to gate last IBM and its technology Partners AMD chartered semiconductor Samsung and UMC included chose to stay with gig first in the end gate last was the right decision despite its benefits gate first did not yield and the Fabs who stuck with it suffered greatly being the only independent Foundry with a 28 nanometer process that actually worked tsmc ate up the entire market and shut the door on UMC since then UMC has essentially waived the White Flag leaving tsmc unchallenged on Taiwan one final thing as part of their business strategy UMC has been far more willing to enter new markets wherever it might be able to find some Advantage one of those markets was China in 2000 Richard dung leaves tsmc and goes to Shanghai to set up smic a year after that UMC goes to the mainland as well purchasing 15 of a company called in the jiangsu province Robert Zhao did this in secret and in violation of a 1991 Taiwanese law restricting such large investments in the mainland called don't rush be patient later on it was discovered that UMC had also transferred valuable 8-inch wafer production technology to hajjian this led to a large scandal after DPP president Chen shrey bien won re-election his administration aggressively pursued Tao Tao later resigned as UMC chairman after 20 years and eventually was so fed up that he renounced his Taiwanese citizenship and moved to Singapore he eventually returned a few years later Morris tang and tsmc eventually got the law changed I discussed the decision in a previous video of mine after that tsmc and UMC were able to legally establish subsidiaries on the mainland there has since been one more significant incident in 2018 UMC was indicted by the American government for transferring memory chip designs from its client Micron Technology to a Chinese semiconductor maker in 2020 they paid a 60 million dollar fine and is serving a three-year probation period in 2021 UMC generated 7.7 billion dollars in Revenue a 20 jump year over year in 2021 Global foundries made 6.6 billion and smic 5.44 billion so UMC sits behind just tsmc and Samsung has the world's third largest dedicated Foundry companies most advanced process in their 12 Fabs is a 14 nanometer node however most of their bread and butter comes from nodes in the 65 to 28-22 nanometer ranges The Sweet Spot considering the nature of our recent chip shortages amidst record-setting profits and over 95 Fab utilization rates they have recently announced billion dollar Fab expansions to their Fabs in both Singapore and Tainan Bob Tao and Morris dung have recently settled their differences publicly shaking hands and making peace the two companies that are their legacy Remain the cornerstones of the global semiconductor manufacturing industry alright everyone that's it for tonight thanks for watching subscribe to the channel uh sign up for the newsletter and I'll see you guys next time

Channel: Asianometry

Views: 118,231

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Id: q55lQUHg7Dg

Length: 23min 17sec (1397 seconds)

Published: Sun Dec 11 2022