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Taiwan chipmaker UMC to spend $3.6 billion to expand capacity

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TAIPEI (Reuters) - Taiwan chipmaker United Microelectronics Corp said on Wednesday it will spend T$100 billion ($3.59 billion) over the next three years to expand capacity and will guarantee supplies and prices to its clients as part of the plan, amid a global chip shortage.

Co-president Jason Wang told an earnings call the expansion will take place at an existing UMC facility in the Tainan Science Park, with production scheduled to start from the second quarter of 2023.

UMC's total investment in the science park will reach $T150 billion over the next three years, he added.

"Amid the semiconductor component shortage, we are working with our customers, suppliers and partners to alleviate the capacity tightness across the supply chain," Wang said, adding they operated at full capacity in the first quarter and demand will outpace supply in the second quarter.

The expansion is supported by what Wang called a "multi-year product alignment" between it and unidentified customers.

"That includes a loading protection mechanism that will ensure the P6 capacity is maintained at a healthy loading level," he said, referring to the expansion plan.

The company added in a statement that customers will make a deposit that secures their long-term chip supply at the expanded plant using pre-determined pricing. It did not name the customers.

The company's clients include Qualcomm Inc and Germany's Infineon.

The global chip shortage initially forced automakers to cut production but is now also hurting manufacturers of smartphones, laptops and even household appliances. Chip firms are racing to add capacity to keep up.

Wang said they were still seeing shortages "across the board".

UMC's competitor Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, this month said it plans to invest $100 billion over the next three years to increase capacity at its plants.

That announcement came days after Intel Corp announced a $20 billion plan to expand its capacity.

($1 = 27.8850 Taiwan dollars)

(Reporting by Ben Blanchard, editing by Louise Heavens, Jason Neely and Kim Coghill)

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