Wed, Jul 04, 2001 - Page 17 News List

UMC may shutdown fab, won't cut staff

BLOOMBERG , TAIPEI

United Microelectronics Corp (UMC, 聯電), which expects to post an operating loss for the second quarter, may close one of its chip plants to cut costs, according to e-mail from Chairman Robert Tsao (曹興誠) to employees.

"Should it become necessary, we would consider closing a fab," said UMC spokesman Alex Hinnawi. "However, letting employees go is not an option."

The global slump in chip demand has left more than half of UMC's production capacity idle. The second-largest maker of chips to other companies' specifications circulated the message to workers to shore up morale, Hinnawi said.

Details on which of UMC's chip plants might be closed or whether the company will cut spending were not available. There is a strong possibility the company will close one or two plants that make 200mm silicon wafers, analysts said.

UMC has nine chip plants in operation -- one that makes 150mm wafers, seven that make 200 millimeter wafers and one that makes 300mm wafers. The company is opening another 300mm plant in Japan with Hitachi Ltd.

In April, UMC said it would invest most of its capital-expansion budget in factories that make 300mm wafers, which cut the cost of chip-production compared with 200mm wafers more commonly made today.

Last week, UMC denied a report in Taiwan's Economic Daily that said the company will suspend operations at two chip plants.

In June, UMC said second-quarter sales would fall more than expected and may extend their decline in the third quarter.

UMC appointed Tsao as chairman of the company on June 6 as part of a reorganization to cope with a slowdown in demand. Tsao was previously chairman of the UMC Group.

Meanwhile in related news, a local institute said yesterday it expected Taiwan's semiconductor output to fall 12 percent this year, due to the global economic slowdown, in the first decline since 1987.

The semi-official Industrial Technology Research Institute (ITRI) saw the nation's chip output at NT$616.2 billion (US$17.9 billion) in 2001, down from NT$700.4 billion last year, said Alfred Wang, ITRI's semiconductor industry research manager.

The decline would mark the first contraction in output since 1987 when the institute began recording the data, he said.

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