by Anton Shilov
02/05/2003 | 12:03 PM
After acquiring a 30% share in SiS and receiving two seats in seven-member management board of the chipset designer, UMC announced its desire to shift toward a new business model that requires closer work with fables semiconductor designers, as reported by DigiTimes. The move is pretty logical, as the utilization of the fabs and lowering gross margins is a very serious issue for contract chip makers nowadays.
UMC plans to shrink the number of customers and concentrate on supporting the biggest and most perspective clients. This approach will allow the company to improve the quality of work and also gain gross-margins as a result of avoiding price competitions with the arch-rival TSMC. Price wars are very tough for UMC who constantly has unutilized facilities; in case UMC concentrates on just several clients, there can be benefits for both sides. UMC itself will be sure about its future, while clients may work closer with the chipmaker while developing design rules for the fabrication processes. On the other hand, in case clients have to work exclusively with UMC, it will mean less flexible solution for them. <%BANNER[article]%>
Since UMC and SiS is very close now, both companies may start to aggressively push chips developed by SiS’ and made by UMC to the market offering lower prices and larger quantities. If it happens, it will be a bad time for VIA and TSMC, as well as some other semiconductor firms including Intel, who may not provide SiS a license on 800MHz Quad Pumped Bus (see this news-story). And let us not forget that SiS was going to greatly expand the portfolio of non-core-logic-related products in 2003 and expects the sales of the appropriate divisions to grow three times from what they had last year (see this news-story).