United Microelectronics Corp (UMC, 聯電), the world’s No. 3 contract chipmaker, yesterday said its net profit declined 72 percent last quarter because of fewer asset gains, but its operating profit rose because of stronger-than-expected seasonal demand.
During the April-to-June period, net income plunged to NT$1.81 billion (US$23.9 million), or NT$0.15 per share, compared with NT$6.59 billion, or NT$0.52 per share, in the first quarter, the company’s financial statement showed. The figure also represented a 31.6 percent decline from NT$2.65 billion a year ago.
Non-operating gains fell to NT$631 million last quarter from NT$7.25 billion in the first quarter, when it booked gains from the asset revaluation of newly acquired Chinese chipmaker Hei Jian Technology (Suzhou) Co (和艦科技).
Operating profit nearly quadrupled to NT$1.15 billion last quarter from NT$294 million in the previous quarter.
“UMC’s second-quarter operating results exceeded expectations,” company chief executive officer Yen Po-wen (顏博文) told an investors’ teleconference.
For this quarter, “we’ve seen some downward revisions of forecast figures” by customers, Yen said, adding that “overall chip demand [over the next two quarters] will be highly related to the market and inventory situation.”
UMC has observed that overall industry inventory is on the rise, Yen said.
The company expects its revenue this quarter to grow by 3 to 4 percent from last quarter’s NT$31.91 billion on the back of a 3 to 4 percent sequential growth in wafer shipments and a flat average selling price.
The revenue forecast was in line with the 4 percent sequential growth estimated by Credit Suisse analyst Randy Abrams.
About 20 percent of UMC’s revenue came from 40-nanometer chips last quarter. By application, more than half of its revenue was derived from handset chips and other communications devices.
The company expects its operating profit margin to improve to a high single digit percentage this quarter, from 3.6 percent last quarter.
UMC also forecast that its solar business would generate NT$1.5 billion in revenue this quarter and report a loss of NT$600 million.
As for the next quarter, Yen declined to comment on whether UMC’s revenue would also see a similar quarterly decline of 10 percent as bigger rival Taiwan Semiconductor Manufacturing Co (台積電) forecast last month.
UMC said its 28-nanometer technology development was on track and expected revenue contribution from 28nm chips to contribute up to 2 percent of its overall revenue.
“The market is cautious about UMC’s migration to 28nm and beyond, while potential competition at the existing 40nm process business is getting more severe,” Daiwa Capital Markets analyst Eric Chen (陳慧明) said in a note.