United Microelectronics Corp (UMC,
"We can't offer the same amount of support to everyone," Hu said. "We have to focus on the ones that can win big."
Emphasizing larger clients may help the company develop more advanced technology and catch up with larger rival Taiwan Semiconductor Manufacturing Co (TSMC,
UMC had a 39 percent drop in second-quarter profit, while TSMC reported a 26 percent gain.
"The gap between TSMC and UMC is widening," said Barro Liao, a fund manager at Prudential Securities Investment Trust Co (
Investors like Liao are concerned that UMC may shut itself off from small companies with growth potential, while its larger customers aren't growing as fast as those of its bigger rival.
TSMC is still setting the pace, posting a 32.8 percent rise in sales for July and last month from a year ago, against a 6.7 percent gain for UMC.
"We expect to have more leaders coming to us," said Hu, who worked for US chip designers S3 Inc and Sirf Technology Inc before joining the Taiwanese chipmaker.
"We have seen that in the last two months," he said.
UMC, which makes chips for companies including Advanced Micro Devices Inc and Infineon Technologies AG, has reduced its list of customers from 400 a year ago, Hu said. The company's 20 biggest buyers account for about 80 percent of sales.
UMC received a vote of confidence in its manufacturing ability this month when Xilinx Inc, the world's biggest designer of programmable semiconductors, said it would place more orders for advanced chips with the Taiwan company.
Some analysts said TSMC is better placed to win more business from existing customers.
TSMC supplies companies such as Santa Clara, California-based Nvidia Corp, which makes graphics chips for Microsoft Corp's Xbox video-game player.
"You've got to have the right customer mix," said Chris Hsieh (
"Unfortunately, UMC doesn't have such customers," Hseih said.
Hu argues that his background as a customer of UMC gives him a better sense of what semiconductor buyers need.
"We can understand our customers' markets," Hu said.
"We have to work together to define what's the best technology for customers' next-generation products," he added.
UMC sees wireless and digital entertainment electronics as the product areas with the most growth potential.
To tap into such growth areas, the company's venture capital unit will continue to "incubate good startup companies," Hu said.
The unit has invested in 40 companies in Taiwan and the US.
Hu said UMC will keep this year's planned capital spending at US$500 million, which will be doubled to US$1 billion next year.
The company will also shoulder investment in a US$3.6 billion chip plant in Singapore on its own after partner Infineon, Europe's second-largest semiconductor maker, pulled out last month.
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