United Microelectronics Corp (UMC, 聯電), the world’s No. 2 contract chipmaker, yesterday reported its fourth straight quarterly profits amid a strong recovery in demand for chips used in consumer electronics.
Continued rising demand for higher-priced chips would boost profits even further this quarter, the company said.
In the first quarter, UMC posted earnings of NT$3.48 billion (US$110 million), compared with losses of NT$8.16 billion a year ago when the global recession curbed electronics demand.
On a quarterly basis, the results represented a decline of 21 percent from the NT$4.4 billion earned in the final quarter of last year, because of falling prices and a stronger New Taiwan dollar, the company said.
Despite the recovery in demand, UMC was relatively conservative in its capacity expansion plans compared with its bigger rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).
TSMC has said it plans to break ground on a new 12-inch fab in Taichung in the middle of the year. The new plant will be able to process 100,000 12-inch wafers a month, like its other 12-inch fabs.
UMC chief executive Sun Shih-wei (孫世偉) told investors yesterday that the company’s “key focus for now is to improve our product [mix].”
“We want to migrate to [more advanced] 65-nanometer and 55-nanometer [process technology]” in collaboration with customers, Sun said.
Revenues from chips made on 65-nanometer technology are expected to climb to 25 percent this quarter and rise further to between 35 percent and 40 percent at the end of the year. Sales from 65-nanometer processed chips accounted for 18 percent of total revenues of NT$26.72 billion in the first quarter, Sun said.
Encouraging “customers to order more chips using the more advanced technology will give a big boost to UMC’s average selling price and revenues, and reduce the risk of overcapacity,” said Kenneth Lee (李克揚), a semiconductor analyst with Fubon Securities Investment Services Co (富邦投顧).
UMC expects higher profits and revenues in the current quarter amid brisk demand across the board — consumer electronics, communications and computers, Sun said.
Gross margin could rise to 28 percent or 29 percent this quarter, from 24.6 percent last quarter, he said.
New outsourcing orders from integrated device manufacturers, which design and produce chips in their own factories, should also contribute to an improved product mix, Sun said.
“Demand is quite strong ... We are quite optimistic about the second half,” Sun said.
Shipments are forecast to grow by between 7 percent and 9 percent, from last quarter’s record-high of 1.03 million 8-inch equivalent wafers, UMC said, lifting factory utilization rate to more than 95 percent this quarter from 88 percent last quarter.
Commenting on the progress of its planned acquisition of Chinese chipmaker He Jian Technology (Suzhou) Co (和艦), UMC chief financial officier Liu Chi-tung (劉啟東) said the company was preparing to apply to the government, but gave no timetable.
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