Infineon and United Microelectronics to Extend Partnership - Analyst Blog

Leading semiconductor and complete systems solutions provider, Infineon Technologies AG (IFNNY), announced that it has extended its manufacturing partnership with United Microelectronics Corporation (UMC) to develop power semiconductors for automotive applications.

The extension agreement requires Infineon to extend its automotive-qualified Smart Power Technology (SPT9) to United Microelectronics, which will then broaden its production for the 300mm wafers. Infineon‘s SPT9 is a proven 130-nanometer (nm) process technology designed for bringing together the microcontroller intelligence and power technology on a solitary die.

United Microelectronics is planning to start the production of SPT9 products at its Taiwan-based 300mm fabrication facility (“Fab”) by the beginning of 2018. The company has also been manufacturing logic chips for Infineon for a period of over 15 years.

SPT9 is Infineon's key innovation for automotive applications as it not only provides improved performance and safety features, but also cuts down on size and costs of the required semiconductors. The combination of advanced digital logic circuits, sensor interface and power electronics makes the semiconductors highly compact and integrated, providing it with an unprecedented level of functionality.

On the other hand, United Microelectronics has the necessary manufacturing capabilities to meet the rigorous requirements of the production. The company has already achieved the Grade 0 automotive industry quality standards, which is the highest-rated standard in the domain.

This partnership brings together the strength of the two key players, Infineon's technology prowess and United Microelectronics' expertise in manufacturing. As per a 2013 report, the global automotive semiconductor market was valued at $25.1 billion. Infineon commanded the second rank in terms of market share which stood at 9.6%; whereas United Microelectronics is a leading global semiconductor foundry, generating annual revenues of over $4 billion.

The partnership extension places the two companies quite well to gain from the growing automotive semiconductor market.

Infineon currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Ambarella, Inc. (AMBA) and AXT Inc. (AXTI), both of which sport a Zacks Rank #1 (Strong Buy).