United Microelectronics Corp (UMC, 聯電), the world’s No. 2 contract chipmaker, yesterday reported a stronger-than-expected quarterly net income as higher shipments and better cost control helped lift its profit margin.
That lent support to UMC’s previous statement that the first quarter would be the trough of this down cycle driven by inventory reduction. As clients have started to rebuild inventory, UMC expects shipments to grow 15 percent this quarter, from 963,000 8-inch equivalent wafers last quarter.
The projection reflects its belief that “the semiconductor industry’s multiquarter inventory correction has subsided,” UMC chief executive officer Sun Shih-wei (孫世偉) told an investor conference yesterday.
Net income rose 36 percent to NT$1.34 billion (US$45 million) during the quarter ending March 31, from NT$980 million in the final quarter of last year. On an annual basis, first-quarter net profit plunged 70 percent, from NT$4.48 billion a year earlier.
Operating margin improved to 5.6 percent last quarter, from 3.4 percent in the fourth quarter, a company statement showed.
“UMC’s first-quarter profitability beat expectations,” Credit Suisse analyst Randy Abrams said in a report yesterday.
The result was far ahead of Abrams’ forecast of a net profit of NT$435 million. He rated UMC “outperform” with a price target of NT$17.50.
Sun was also upbeat about the outlook for the current quarter, which again was better than most analysts’ forecasts.
Sun said the average selling price would be flat this quarter compared with last quarter in US dollar terms. That means the chipmaker’s second-quarter revenue would rise about 15 percent quarterly.
Demand from communications and consumer electronics chips would outpace that of computer chips, Sun said.
“The [revenue] growth [forecast] is higher than my expectation of 10 percent,” KGI Securities Investment Advisory Co analyst Ricky Liu (劉浩民) said. “That will be fueled by customers rebuilding inventory, primarily from smartphone chip designers — or mainly from MediaTek Inc (聯發科).”
Despite the solid recovery in demand, UMC did not change its capital spending plan of US$2 billion for this year — most of which will go into developing advanced 28-nanometer (nm) technology.
“The lead time for 28nm capacity deployment is long. It is unlikely to boost capacity for short-term demand,” Sun said.
Besides, UMC plans to adjust its capacity for 65nm chips to make 28nm chips to satisfy clients’ demand, he said.
Meanwhile, rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is set to upgrade its capital spending for this year to more than the record US$7 billion it spent last year, citing insufficient capacity to meet customers’ demand for 28nm chips.
UMC plans to ramp up production of 28nm chips in the second half as scheduled, Sun said. The chipmaker expects 28nm chips to account for 5 percent of its total revenue by the end of this year.
UMC’s board also approved a proposal to issue NT$20 billion in corporate bonds as part of its plan to seek strategic partners.
In addition, the board gave the green light to acquire another 65 percent of Chinese chipmaker HeJian Technology (Suzhou) Co (和艦科技) to increase its stakeholding from the current 30 percent to about 90 percent. The company said it would cost about NT$190 million to acquire the 65 percent stake.
The board also passed a proposal to distribute NT$0.50 in cash dividend per share, which translates into a payout ratio of about 60 percent.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts