United Microelectronics Corp (UMC, 聯電), the nation’s No. 2 contract chipmaker, yesterday reported weaker-than-expected net income for last quarter, as the company’s investment in new business, especially in the solar power sector, dragged down its overall performance.
Net income was NT$2.57 billion (US$84.62 million), or NT$0.23 per share, last quarter, the company said. That was 22.59 percent lower than the previous quarter’s NT$3.32 billion and lagged behind the market consensus of NT$3.4 billion.
Gross margin for last quarter also contracted by 6.11 percentage points to 21.5 percent from the previous quarter, also less than the market consensus of 23.4 percent.
The company saw consolidated revenue for last quarter decline 1.84 percent from the previous quarter to NT$35.21 billion, although it rose 5.4 percent year-on-year.
“Foundry sales actually posted a quarterly growth of 2.9 percent to NT$33.51 billion last quarter, with capacity utilization reaching 93 percent,” UMC chief executive officer Yen Po-wen (顏博文) told investors in a conference call, citing increasing demand for communication products used in handsets and tablet devices.
The demand brought the company’s shipments to 1.46 million 8-inch equivalent wafers, he added.
Yen said that for last quarter, 24 percent of the revenue came from 40-nanometer (nm) chips, while 28nm revenue contribution rose from 1 percent to 3 percent quarter-on-quarter, which suggested the sustained traction of UMC’s leading edge geometries.
Looking forward, Yen said the 28nm yield rate progress would continue to improve and would drive significant production this quarter.
This progress would help attract multiple waves of new customers and products to strengthen UMC’s 28nm growth and further diversify the company’s customer base in advanced nodes, he said.
“We expect 28nm revenue contribution will account for more than 6 percent in this quarter. We also expect it will have sequential growth in the first quarter next year,” Yen said.
The company’s recent announcements to partner with Fujitsu Semiconductor Ltd of Japan and to form a joint venture with the Xiamen City Government in China illustrate the company’s intention to expand its operating scale, he told investors.
The alliance with Fujitsu includes a 40nm licensing agreement which would enable UMC to better serve the Japanese market, especially for the automotive, industrial and consumer electronics segments, Yen said.
The planned investment with the Xiamen City Government and Fujian Electronics & Information Group (福建電子信息集團) in a 12-inch fab for 40nm and 55nm chips is pending the Taiwanese government’s approval, he said.
UMC is continuing to work on 10nm and 14nm advanced technologies in Taiwan to ensure the company’s next stage of growth, he said.
For this quarter, Yen said the company expects wafer shipments to decrease 3 percent, while the gross margin for the foundry segment is expected to be in the mid-20 percentage range, with above 90 percent in capacity utilization.
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