UMC Starts Mass Production of Silicon Photonics in Singapore as AI Demand Strengthens Outlook

United Microelectronics Corporation (UMC) has announced the start of mass production for silicon photonics wafers at its manufacturing facility in Singapore, positioning the company to capitalize on rising demand for high-speed optical interconnect technologies used in artificial intelligence and hyperscale data centers. The achievement marks the first commercial production of the technology at the site and represents an important milestone in UMC's expansion into advanced semiconductor solutions.

The project was developed in partnership with Singapore-based fabless chip design company SILITH Technology. According to UMC, the two companies successfully moved the silicon photonics platform from initial development to production readiness in just 18 months, creating a manufacturing platform designed to support next-generation AI computing infrastructure. The company also plans to introduce its own 12-inch silicon photonics platform for customer product development by 2027.

The production milestone comes as analysts become increasingly optimistic about UMC's near-term business outlook. Citi expects the chipmaker's second-quarter 2026 revenue to rise 13% from the previous quarter, accompanied by an improvement in gross margins. Recent operating results have also reinforced that positive view, with June revenue increasing 22.85% year over year to NT$23.12 billion, while cumulative first-half sales climbed 11.28%.

Despite the encouraging business developments, UMC's shares declined during Tuesday's trading session in Taiwan before recovering part of the losses to close down 1.6%. The muted market reaction contrasted with the company's improving operating performance and reflected broader volatility across semiconductor stocks rather than company-specific concerns.

UMC's expansion also highlights Singapore's growing role within the global semiconductor supply chain. A number of Taiwanese technology companies have been increasing their manufacturing presence in the city-state, including King Yuan Electronics and Vanguard International Semiconductor, which recently partnered with NXP Semiconductors to develop a $7.8 billion semiconductor fabrication facility.

Silicon photonics has become an increasingly important technology as AI workloads drive demand for faster and more energy-efficient data transmission. By combining optical communication with semiconductor manufacturing, the technology enables significantly higher bandwidth for data centers and AI computing systems. According to Polaris Market Research, the global silicon photonics market is expected to reach approximately $3.71 billion in 2026, supported by continued growth in cloud computing, AI infrastructure and high-speed networking.