United Microelectronics Corp (UMC, 聯電), the world’s second-biggest maker of customized chips, could get out of the red this year as stronger-than-expected August sales heralded a more resilient recovery in the second half on better operating efficiency and lean inventory, analysts said yesterday.
Credit Suisse semiconductor analyst Randy Abrams yesterday raised his revenues and earnings forecast for UMC’s third and fourth quarters, which could bring the chipmaker’s bottom line this year to earnings of NT$1.08 billion (US$3.3 million), rather than the NT$822 million in losses he initially forecast.
“We believe the company will grow 3 percent month-on-month in September, bringing revenue growth to 20 percent quarter-on-quarter [in the current quarter],” Abrams said in the report.
UMC projected on July 29 that its revenues could grow by as much as 15 percent this quarter from NT$22.63 billion in the second quarter, after the company reported a surge of 108.8 percent in second-quarter revenues from NT$10.84 billion in the first quarter.
At the time, UMC chief executive officer Sun Shih-wei (孫世偉) said that third-quarter wafer shipments would rise between 8 percent and 10 percent from the second quarter, while average selling prices (ASP) would advance 5 percent quarter-on-quarter.
“Through August, UMC has booked 69 percent of its revenue forecast of a 15 percent quarter-on-quarter growth. We believe the company will grow 3 percent month-on-month in September, bringing revenue growth of 20 percent quarter-on-quarter,” Abrams said in the report.
Abrams also raised its fourth-quarter revenue forecast to zero growth from a previous estimate of a 7 percent quarter-on-quarter decline.
“Lean semiconductor inventory and downstream builds are lifting the fourth quarter,” he said.
Citigroup analyst Andrew Lu (陸行之) also adjusted upward his earnings forecast for UMC to NT$0.04 per share this year, from a loss of NT$0.21 per share, factoring in a better third-quarter performance and a more moderate fourth-quarter downturn.
“Demand is strong at all 12-inch fabs and 0.13-micron and 0.18-micron technologies at our 8-inch fabs,” Lu said in a report issued on Tuesday, adding that Taiwanese chip designers were showing stronger demand than others.
UMC, however, could be more exposed to market share losses and pricing cuts — resulting from the integration of contract chipmaker Chartered Semiconductor Manufacturing Inc and Globalfoundries — than bigger rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) over the next two to three years, Lu said in the report.
Commenting on industry competition, Abrams said the alliance between TSMC and IBM to consolidate foundry resources would not pose an imminent threat to UMC.
Lu retained his original rating on UMC at “sell” and Abrams reiterated a “neutral” rating.
Shares of UMC and TSMC fell 0.93 percent and 1.12 percent to NT$16 and NT$62 respectively, underperforming the benchmark TAIEX index, which lsot 0.87 percent.
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