Thu, Oct 29, 2015 - Page 13 News List

UMC forecasts low point this year as shipments taper off

By Lisa Wang  /  Staff reporter

United Microelectronics Corp (UMC, 聯電) yesterday said business would hit a low point this quarter as customers are about to complete their inventory adjustments.

Shipments are expected to drop about 5 percent from last quarter, with demand in the computer segment likely to be the weakest, followed by the communications and consumer segments, the nation’s No. 2 contract chipmaker said.

Average product selling prices are set to drop by less than 1 percentage point from a quarter earlier, while the factory utilization rate is set to dip to about 80 percent from 89 percent the previous quarter, UMC said.

“Customer demand has been stabilized and their inventories should move closer to reasonable levels in a few months,” UMC chief executive officer Yen Po-wen (顏伯文) told investors. “Our foundry revenue will reach its lowest point at the end of this year, or at the beginning of 2016.”

Gross margin, however, will be little changed from last quarter’s 19.6 percent, supported by favorable foreign exchange rates and better production yields, the company said.

UMC posted its worst quarterly net profit in 18 months last quarter, with net income plunging 63 percent to NT$1.71 billion (US$52.3 million) from NT$4.6 billion in the previous quarter, operating income sinking 75 percent to NT$981 million from NT$3.88 billion and revenue falling 7 percent to NT$35.32 billion.

Commenting on the progress of the 28-nanometer chip business, Yen said the company “remains positive on its 28-nanometer [technology this quarter] based on customer engagement.”

While overall revenue will continue to fall this quarter, revenue from 28-nanometer chips will be flat from last quarter, Yen said.

The company’s 28-nanometer chip business is likely to hit the trough this quarter, he said.

Revenue from 28-nanometer chips accounted for 10 percent of the company’s total revenue last quarter, Yen said, adding that UMC is aiming to boost the share to between 15 percent and 20 percent in the second quarter of next year.

“We believe the 28-nanometer node will be a strong node and will be a major growth driver for the company over next few years,” he said.

The 28-nanometer chip capacity will reach 30,000 wafers per month by the second half of next year, Yen said.

UMC maintains its capital spending at US$1.8 billion this year and expects the new 12-inch wafer factory in China’s Xiamen to start small volume production by the end of next year.

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