Thu, Feb 09, 2012 - Page 12 News List

UMC’s Q4 profit drops almost 40%

By Jason Tan  /  Staff Reporter

United Microelectronics Corp (UMC, 聯電), the world’s second-largest contract chip manufacturer by revenue, yesterday said it posted NT$1.18 billion (US$40 million) in profit for the fourth quarter last year, down 39.6 percent from the previous quarter due to slower shipments.

Profit dropped 82 percent from 2010, while revenue declined 3 percent quarter-on-quarter, or 22 percent year-on-year, to NT$24.43 billion, the company said.

The revenue drop was caused by a 10 percent drop in fourth-quarter shipments, chief executive Sun Shih-wei (孫世偉) told investors at a conference.

For the whole of last year, net income was NT$10.8 billion, or NT$0.86 per share — a plunge of 54.8 percent from NT$23.9 billion, or NT$1.91 per share, a year ago.

Revenue last year decreased 12.1 percent to NT$105.88 billion.

UMC expects revenue this quarter to dip slightly from the fourth quarter, even though chip-wafer shipments are projected to increase slightly from the fourth quarter.

The average selling price this quarter may decrease 5 percent due to the changes of product mix, given that the firm will ship more 8-inch wafers than 12-inch wafers.

“There have been signs of the economy starting to bottom out, but how fast the recovery will be depends on the demand from end devices and performance of the macro economy,” Sun said.

UMC plans to spend US$2 billion on capital expenditure this year, more than the US$1.6 billion spent on technology migration and capacity expansion last year.

The increase comes as UMC plans to boost its advanced technologies, in particular the 28 nanometer (nm) wafers, which are expected to account for 5 percent of total shipments by the end of this year, Sun said. Forty nanometer wafers, which took up 10 percent of shipments late last year, would rise to 15 percent, he added.

Last year, advanced wafers, 65nm and below, already contributed 39 percent to total revenue. That was up from 27 percent in 2010.

The company said capacity utilization would remain in the high-60 percent range in the first quarter, compared with 68 percent in the fourth quarter.

Shares of UMC closed up 0.33 percent to NT$15.4 on the Taiwan Stock Exchange before the earnings announcement.

Bank of America Merrill Lynch said in a report on Monday last week that catalysts to UMC’s stock price this year include the further inventory reduction at fabless customers and downstream hardware companies, while its new customers and products in the first half of the year would help drive up utilization on its advanced fabs, especially 40nm and 28nm.

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