United Microelectronics Experiences Rising Geopolitical Risks

Geopolitical tensions between China and Taiwan are increasing, making United Microelectronics (UMC) a riskier investment. As a semiconductor company, UMC's operations are closely tied to the region, exposing it to potential disruptions and instability. While the company has been growing and innovating, the risks associated with the geopolitical situation may outweigh the rewards for investors.

The geopolitical tensions between China and Taiwan have been escalating, leading to a more volatile investment environment for companies with close ties to the region. One such company is United Microelectronics Corporation (UMC), a leading semiconductor company based in Taiwan [1]. UMC's operations are deeply intertwined with the region, making it vulnerable to potential disruptions and instability.

On March 13, 2025, Taiwanese leader William Lai delivered a speech outlining 17 measures aimed at strengthening Taiwan's ties with the United States and deepening its democratization efforts. Beijing responded swiftly with condemnations, further heightening tensions across the Taiwan Strait [1]. Lai's designation of the Chinese mainland as a "foreign hostile force" is likely to be a significant irritant for Beijing, as it goes against Taiwan's constitutional recognition of only one China [1].

UMC's exposure to the geopolitical situation extends beyond Taiwan. The company has been expanding its operations in China, with plans to invest $10 billion in a new 300mm fab in Xi'an [2]. This investment, which is expected to be completed in 2027, underscores UMC's commitment to the Chinese market. However, it also exposes the company to potential risks, such as increased regulatory scrutiny or even physical disruption.

Despite these risks, UMC has continued to grow and innovate. In 2024, the company reported revenue of $12.6 billion, up 12% year-over-year [3]. UMC has also been investing heavily in research and development, with a focus on advanced technologies such as AI, IoT, and 5G [3].

However, the risks associated with the geopolitical situation may outweigh the rewards for investors. As tensions between China and Taiwan continue to escalate, UMC's operations in both Taiwan and China could be disrupted, leading to financial losses and reputational damage. Investors should carefully consider these risks before investing in UMC.

References:

[1] Pekingnology.com. (2025, March 14). Tensions over Taiwan. https://www.pekingnology.com/p/tensions-over-taiwan
[2] Digitimes.com. (2023, August 15). United Microelectronics to invest $10bn in new 300mm fab in Xi'an, China. https://www.digitimes.com/news/a20230815PD208.html
[3] United Microelectronics Corporation. (2025). Annual Report 2024. https://www.umc.com/en/investors/financial-reports/annual-reports