Taiwan's second largest computer chipmaker, United Microelectronics Corp (UMC,
TSMC issued a statement last Friday, saying that its fourth-quarter shipments would reach the same level as the third quarter, a marked improvement on its initial forecast of a 10-percent decrease in sales. The statement noted that the revision was "due to the recent pick-up in PC demand and increased demand for communications products for the Christmas season.
UMC is expected to make a similar statement this week.
"I expect UMC to revise its forecast, but the percentage difference will not be as great as [for] TSMC," said George Wu (
"UMC had predicted a sales decrease in the low teens percentage-wise for the fourth quarter. I'm now expecting sales to be flat compared to the third quarter," Wu said.
TSMC's statement also raised the company's predicted utilization rate, which measures the number of production lines in use, from 50 to 60 percent. Wu pointed out that UMC's predicted utilization rate was 60 percent, 10 percent higher than TSMC's [original forecast].
"UMC had already predicted a 60-percent utilization rate, so I don't expect that they will revise this significantly," he said.
While more cautious, others agreed.
"So far we are not changing our guidance on UMC, but we also feel a rush of orders will come in," said James Huang (黃建銘), an analyst at SinoPac Securities Corp (建華證券) in Taipei.
"I think that UMC will probably revise up their fourth-quarter guidance, but the range will not be as great as TSMC. Originally UMC said [they were forecasting] around a 10 percent decrease. I guess they will increase to a flat performance compared to the third quarter," Huang said.
However, it is not clear whether the increase in orders is seasonal.
"There are two ways to look at the increase in orders. One is to see it as a seasonal push that will decline rapidly in the first quarter of 2003. The other is that customer inventory is already low, so there is a chance for the level of orders to be sustained. Personally, I feel we'll be at least flat in the first quarter of next year, so I'm standing more on the positive side," Huang said.
Wu confirmed that low inventory was a major factor behind the increase in orders.
"All major clients [of TSMC and UMC] have low inventories, so when their orders pick up, they have to rush orders to the foundries, thus pushing the utilization rate up rapidly to 60 percent," Wu said.
A source at UMC refused to confirm any change in forecast. "There are no plans as yet to issue a revision to our fourth-quarter guidance," the source said yesterday.