United Microelectronics Corp (UMC, 聯電), the world’s No. 3 contract chipmaker, yesterday said net profits plunged 93 percent sequentially last quarter after a strong earthquake briefly disrupted its advanced 28-nanometer (nm) chip production.
UMC expects rapid restoration of its production lines, and growing demand for 28nm and advanced chips primarily from the communications segment ahead of new product launches, to boost business.
UMC chief executive officer Yen Po-wen (顏博文) expects “a significant increase in 28nm shipments for the second quarter,” due to rebounding demand from the communications segment.
As a result, 28nm revenue contribution is to climb between 15 percent and 18 percent this quarter and to 20 percent next quarter, from 8 percent last quarter, Yen said.
UMC is one of the world’s major 28nm chip suppliers along with Taiwan Semiconductor Manufacturing Co (台積電).
“We also expect to receive many new 28nm tape-outs during this year that include mobile and consumer applications, which would further diversify our 28nm product pipeline and contribute to 28nm revenue growth,” Yen said.
Yen said supply chain “inventory correction has completed its course, with normal seasonal patterns resuming during the first half of this year.”
Revenues this quarter might grow 6 percent to 7 percent from last quarter’s NT$34.4 billion (US$1.06 billion), as UMC expects wafer shipments to rise 5 percent and average selling price to go up by 1 percent or 2 percent at a quarterly pace.
Gross margin is to rebound to a low 20 percent range this quarter from 14.6 percent last quarter, Yen said.
Equipment utilization would also bounce to a high 80 percent range from last quarter’s 82 percent, with usage of its 12-inch factors topping 90 percent, UMC said.
During the quarter ending March 31, net profits took a nosedive to NT$210 million, from NT$3.16 billion in the fourth quarter last year, hitting the lowest level in 28 quarters, or since the 2008-2009 financial crisis.
UMC swung into operating loss of NT$16 million last quarter, from operating profit of NT$1.88 billion a quarter ago.
Last quarter’s figure fell short of most analysts’ expectations, including Daiwa Capital Markets analyst Rick Hsu (徐稦成), who expected UMC to make NT$356 million in net profit. Consensus estimate was NT$1.65 billion, according to a Daiwa report.
UMC said the construction of its new Chinese factory, a joint venture with the Xiamen City Government and Fujian Electronics & Information Group (福建電子信息集團), is on track. The 12-inch factory is scheduled to enter volume production in the final quarter this year.
UMC said it was approached by third-party semiconductor companies in China to form a partnership, including memory chip firms. However, UMC has no plan to tap into the memory chip manufacturing industry at the moment, it said.
The chipmaker said it is making efforts to shrink wafer geometry to next generation. UMC said it plans to start volume production of next-generation, or 14nm technology, in the second half of next year, with the first batch of 14nm chips used in communications products and consumer electronics.
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