Taiwan’s second-largest chipmaker starts mass production in Singapore; Citi sees improving outlook
Commercial buildings illuminated at dusk in Singapore, on Monday, Feb. 2, 2026. Photographer: SeongJoon Cho/Bloomberg via Getty Images
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Taiwan’s second-largest contract chipmaker, United Microelectronics Corporation (UMC), announced Tuesday its first mass-produced silicon photonics wafers manufactured within its Singapore facility.
UMC is aiming to address the growing demand for high-speed optical interconnects in AI and hyperscaler data center networks.
Collaborating with SILITH Technology, a local fabless chip design company, the joint team brought the silicon photonics platform from development to production readiness in 18 months, securing the technology to support next-generation AI infrastructure, UMC said in a statement.
UMC also plans to make its own 12-inch silicon photonics platform available for customer product development by 2027.
It comes as analysts at Citi said they see an improving outlook for the chipmaker in the second half of the year, forecasting a 13% quarter-on-quarter sales jump in the second quarter of 2026 and a gross margin recovery.
Supporting Wall Street optimism, UMC recently reported strong financial performance, with June sales jumping 22.85% year-on-year to NT$23.12 billion ($719.21 million), and first-half cumulative sales rising 11.28%.
The company’s stock, however, fell nearly 5% in Taiwan during Tuesday’s session, before parring losses to trade 1.6% lower.
UMC is part of a broader wave of Taiwanese tech firms expanding their manufacturing footprint in Singapore, as the city-state grows into a major regional hub for the global semiconductor supply chain.
This growing ecosystem includes King Yuan Electronics Corp as well as Vanguard International Semiconductor Corporation, a chipmaker backed by TSMC, which recently partnered with Netherlands-based NXP Semiconductors to build a $7.8 billion manufacturing plant in the city state.
Silicon photonics is an essential technology for transmitting and processing data at ultra-high speeds, with its market seeing notable growth driven by rising data traffic and demand for faster optical communication, pushing its global size to an estimated $3.71 billion in 2026 according to data from Polaris Market Research.