The board of directors of United Microelectronics (UMC) has authorized a capital budget execution of NT$28.656 billion (US$1.02 billion) for capacity deployment, according to a company filing with the Taiwan Stock Exchange (TWSE).

The planned capex will be used to optimize production capacity, particularly that for 28nm process, at UMC's 12-inch fabs in southern Taiwan, according to a report by Taiwan's Central News Agency (CNA).

UMC disclosed previously plans to build additional 28nm process manufacturing capacity in 2021. UMC expects to expand 28nm process capacity at both its STSP fab in southern Taiwan and Xiamen plant in China.

UMC has enjoyed a sustained increase in the number of 28nm tape-outs, the foundry said at its investors meeting in end-October. The foundry saw 28nm chip sales account for 14% of its total wafer revenues in the third quarter of 2020.

UMC expects to post sequential increases of 1-2% in wafer shipments and 1% in ASPs for the fourth quarter of 2020, with flat growth in gross margin. Capacity utilization is estimated at about 95%.

UMC is on track to post a 20% revenue increase in 2020, and is expected to enjoy a strong first half of 2021 thanks to full capacity utilization rates at its wafer fabs, according to industry sources.