UMC Expects Average Selling Prices for Chips to Rise 10% in 2027 as Shipment Growth Faces Constraints
Key Facts
UMC expects its blended average selling price to rise about 10% year over year in 2027 compared with 2026, driven by improved pricing and a higher-value product and technology mix. The guidance follows record shipments in the third quarter, alongside higher revenue and an improved gross margin. Management said on the earnings call that next year's growth would depend more on value and the product and technology mix, while shipments continue to grow. Describing the price as “blended” means the expected increase applies to the average portfolio and does not represent a uniform increase for every product or technology. The company is thus placing improved value per wafer at the center of its 2027 outlook, alongside continued shipment growth.
Consolidated third-quarter revenue was NT$74.24 billion, up 8% from the second quarter and 25.6% from the same period a year earlier, according to results published by the company via Nasdaq. Wafer shipments rose 7.3% from the previous quarter, exceeding 1.2 million 12-inch equivalent wafers, a company record. Gross margin also improved to 34% from 32.5% in the second quarter. This coincided with capacity utilization rising to 92% from 85% in the previous period, while several 12-inch fabs operated at full capacity. The figures point to increased operating activity in the third quarter, alongside improved revenue and margins.
Management said customer demand exceeded available capacity in some technologies, and shipment growth in 2027 would face increasing constraints from available manufacturing capacity. Part of the pricing guidance is therefore tied to a greater shift toward a higher-value product and technology mix, rather than simply an increase in the number of wafers shipped. The company acknowledged that continued shipment growth would not remove current capacity limits, after fab utilization reached 92% in the third quarter. Meanwhile, the board on October 28 approved an additional capital expenditure budget of about US$3.2 billion to accelerate the expansion schedule in Singapore and Tainan. The company said the additional budget would enable it to accelerate that expansion, while near-term shipment growth would remain tied to the capacity it can provide.
In the nearer term, UMC expects shipments to rise by a low single-digit percentage in the fourth quarter compared with the third quarter, while the U.S. dollar average selling price remains steady. It also expects a gross margin similar to the previous quarter and capacity utilization in the low 90s percent range. These forecasts point to a relatively stable next quarter, ahead of the improvement the company expects in its blended average selling price in 2027. However, the chief financial officer said higher depreciation tied to investments would weigh on gross margin, which is unlikely to approach its previous high levels. This puts product-mix and pricing improvements alongside investment costs when assessing the margin outlook.
On projects tied to new technologies, UMC said customer engagement with advanced packaging and silicon photonics projects remained strong, and it expects that engagement to translate into additional growth over the coming quarters as existing projects expand and new products become available. The company also forecast that AI-related revenue would account for 25% of total revenue within three years of October 28, 2026. These expectations link demand for AI applications and packaging and photonics projects with the company's shift toward higher-value technologies. Management said, however, that limited manufacturing capacity could constrain shipment growth, even as demand remains strong in some areas. UMC shares closed at $15.04 on November 10, 2026.