United Microelectronics Corp (UMC, 聯電), the world’s second-biggest contract chipmaker, yesterday said net profit last quarter grew 46 percent from a year ago on the back of rising demand for mobile phone chips.
Fourth-quarter net income expanded to NT$6.42 billion (US$219 million) last quarter, compared with NT$4.4 billion in the same period last year.
On a quarterly basis, however, net profit was down 26 percent from a six-year high of NT$8.72 billion in the third quarter.
UMC accumulated NT$23.89 billion in net earnings last year, growing more than six times from NT$3.87 billion in 2009. Revenue last year set an all-time high at NT$120.43 billion, up 35.9 percent from NT$88.62 billion in the prior year.
After six straight quarters of an industrial uptrend, UMC expected demand to trend down in the seasonally slow first quarter, bringing shipments down by a low-single-digit percentage from 1.13 billion 8-inch equivalent wafers in the fourth quarter, company CEO Sun Shih-wei (孫世偉) told investors.
“We will closely monitor [the market situation] as inventory is rising ... and demand for new tablet [computers] is uncertain,” Sun said.
Sun said demand for chips used in consumer electronics would be relatively weaker than that for chips used in computers and communications devices.
The average selling price in the first quarter is forecast to fall by a low-to-mid-single-digit percentage quarter-on-quarter because of a weaker product portfolio, Sun said.
Gross margin could fall to around 25 percent in the current quarter from 32.1 percent in the prior quarter, Sun said.
Because of the New Taiwan dollar’s appreciation this quarter, “UMC’s revenues will decrease by a faster than [seasonal] pace. The foreign-exchange factor alone will cut UMC’s revenue by more than 6 percent,” said Michael Chou (周立中), a semiconductor analyst with Deutsche Securities in Taipei.
UMC expected the NT dollar to appreciate to NT$28.60 against the US dollar, up 6.8 percent from NT$30.70 in the final quarter of last year. On average, contract chipmakers’ revenues could decline by 5 to 10 percent sequentially in the first quarter.
Last quarter, UMC made NT$31.32 billion in revenue, up 13 percent year-on-year, but down 4 percent quarter-on-quarter. Chips used in the communications segment, primarily for mobile phones, accounted for 56 percent of last quarter’s revenue, up from 53 percent in the third quarter.
Sun said demand from emerging markets for consumer electronics like PCs, cellphones and TVs, has played an important role in the semiconductor industry’s upcycle.
The biggest concern for the company this year would be the ripple effect from emerging countries’ tighter monetary policies, Sun said.
Capital spending this year will be the same as last year at US$1.8 billion, with the bulk going into procurement of new equipment to ramp up its 40-nanometer process technology.
Its bigger rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) plans to boost spending this year to a record US$5.9 billion.
“UMC’s capital spending indicates it is taking a new strategy, seeking stable margins, growth and return on equality, rather than seeking head-to-head competition with [TSMC],” said Steven Pelayo, a semiconductor analyst with HSBC Securities.
UMC was unchanged at NT$17.40 yesterday, implying a 15 percent upside from a target price of NT$20 set by Pelayo, who has an “overweight” rating on UMC.
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