United Microelectronics Corp (UMC, 聯電), the nation’s No. 2 contract chipmaker, yesterday saw its strongest quarterly net profits for two years in the second quarter on higher shipments and improved losses from its solar business.
However, the chipmaker said it expects shipments to drop by about 5 percent in the next quarter as weak macroeconomic conditions curtail end-product demand and prolong inventory digestion.
Average selling price is expected to drop 3 percent sequentially this quarter, UMC said, adding that gross margin would decline to a mid-teen percentage this quarter from 22.9 percent last quarter.
“Looking forward into the third quarter, the limited end-market visibility and inventory correction we mentioned during our first-quarter conference call is expected to continue,” UMC chief executive officer Yen Po-wen (顏博文) told an investors’ teleconference yesterday. “Current weakness in overall demand, partly due to uncertainties in economic outlook, is set to prolong inventory adjustment through the second half.”
That would bring down the company’s factory utilization to between 87 percent and 89 percent this quarter from last quarter’s 94 percent, Yen said.
Yen expects revenue from advanced 28-nanometer chips to account for 10 percent of the chipmaker’s total revenue this year, with the figure climbing to 15 percent in the second quarter of next year.
Net profit expanded 15.6 percent to NT$4.6 billion (US$145.93 million) last quarter, compared with NT$3.98 billion in the first quarter.
Non-operating income jumped to NT$1.3 billion last quarter from income of NT$255 million the previous quarter after the firm booked a narrowed loss of NT$170 million from solar subsidiary Topcell Solar International Co (聯景光電).
UMC said it would sell Topcell to local peer Motech Industries Inc (茂迪) this quarter.
UMC retained its capital spending this year unchanged at US$1.8 billion.
The chipmaker said in a statement filed with the Taiwan Stock Exchange yesterday that its board of directors had given the go-ahead to a share buyback program worth up to NT$78.65 billion.
The company plans to repurchase 200 million common shares, or 1.57 percent of UMC’s total outstanding shares, at a price of between NT$7.55 and NT$18.8 per share during a two-month period beginning today and running through Sept. 29.
UMC said it plans to transfer the repurchased shares to employees.
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