United Microelectronics Corp (UMC,
The firm has cut its capital expenditure from US$2.9 billion to US$1.5 billion in response to slower chip demand, said Peter Chang (
He said that the future direction of chip demand remains uncertain and refused to predict when the widely watched sector will stage a much-awaited rebound.
"We tend to be more flexible and adjust our expenditure in response to demand," he said yesterday during the firm's institutional investor conference.
UMC's rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), announced its own quarterly figures last week.
Weak demand in the semiconductor sector put downward pressure on semiconductor stocks last week.
TSMC fell NT$4 or 4.1 percent to NT$94 and UMC fell by NT$3, or 5.2 percent, to NT$55.
TSMC chairman Morris Chang (
Analysts said UMC's revision for expenditure plans is "quite significant," which may in turn force analysts to cut their current earnings estimates for the company.
Chris Hsieh, a semiconductor analyst at ING Barings Securities in Taipei said, "It shows the firm is not expecting a rebound in the sector for 12 to 16 months."
Struck by the news, Tiffany Chen (
UMC did not provide figures for factory utilization so as not to "create trouble for everyone," company officials said.
But the company did set out to prove that it's a better performer than TSMC.
UMC said it's revenues in the fourth quarter grew by 8 percent to NT$31.48 billion, and net income grew by 14.4 percent to NT$16.71 billion. Revenues for UMC last year skyrocketed 260.5 percent to NT$105.08 billion, while its net income grew by 383.7 percent to NT$50.78 billion.
Chip demand for the industry as a whole is expected to decline by 25 percent in the first quarter, but UMC's performance will be "slightly better," said Thomas Kupec, president of UMC's US subsidiary.
Top companies in the IT sector in the US have been announcing cost-cutting measures over the last month.
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