United Microelectronics Co (UMC, 聯電), the nation’s second-largest contract chipmaker, yesterday reported a 15.5 percent quarterly growth in net profit for last quarter, benefiting from strong demand for chips using its 28-nanometer process technology.
Net profit expanded to the highest level in three quarters at NT$2.98 billion (US$94.43 million), compared with NT$2.58 billion in the second quarter, according to the company’s financial statement.
Earnings per share were NT$0.23 last quarter, compared with NT$0.2 in the previous quarter.
On an annual basis, net profit soared 74.2 percent from NT$1.71 billion, the statement showed.
UMC said that revenue from 28-nanometer chips accounted for 21 percent of last quarter’s revenue, from 17 percent in the second quarter, as the company benefited from strong demand for smartphones.
The momentum in sales of 28-nanometer chips is likely to be sustained into this quarter and UMC considers the chips a major growth driver, the firm said.
Looking ahead, UMC chief executive officer Yen Po-wen (顏博文) said the current quarter would be a flattish period in terms of revenue, bucking the usual downtrend in the fourth quarter.
Yen attributed rising demand for computer-related chips such as LCD panel drivers to a better-than-seasonal forecast.
Overall, the company’s shipments would expand about 5 percent this quarter from last quarter, while average selling prices of chips would decline 5 percent quarter-on-quarter, Yen said.
The equipment utilization rate would increase slightly to 90 percent this quarter from 89 percent last quarter, he said.
However, gross margin is expected to fall to about 20 percent this quarter from 21.8 percent last quarter as UMC cuts prices to boost factory usage.
To fuel growth next year, UMC said it plans to expand its 28-nanometer chip capacity in both Taiwan and China.
The Hsinchu-based chipmaker plans to apply to the government to produce 28-nanometer chips in China in the first half of next year when it starts shipping 14-nanometer chips made in Taiwan, the most firm’s most advanced chips.
The technology road map would allow UMC to meet the government’s requirements. The regulations only allow Taiwanese chipmakers to make chips in China using technologies two generations behind the technologies they are using in their home market.
UMC operates a Chinese factory in Xiamen, Fujian Province, via a joint venture with the local government.
The factory is expected to enter volume production of 40-nanometer chips this quarter, UMC said.
“The production at the Chinese fab signifies an important milestone, as we can tap into China’s rapidly growing chip market and seize new business opportunities,” Yen said.
Capital spending for next year would increase significantly because of the Xiamen factory, UMC said.
This year, the chipmaker plans to spend US$2.2 billion on new facilities and equipment, with 5 percent being spent on 8-inch wafer fabs and 95 percent on 12-inch fabs.
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