Thu, Apr 27, 2017 - Page 12 News List

UMC’s Q1 profit contracts amid slow demand

By Lisa Wang  /  Staff reporter

United Microelectronics Corp (UMC, 聯電), the world’s No. 3 contract chipmaker, yesterday said that net profits shrunk by 10.28 percent last quarter due to slow demand.

Earnings dropped to NT$2.29 billion (US$75.95 million) during the first quarter, compared with NT$2.55 billion in the previous quarter. That translated into earnings per share (EPS) of NT$0.19 last quarter, down from NT$0.21 the previous quarter.

Despite the decline, the result was better than some analysts’ forecasts. Credit Suisse analyst Randy Abrams was expecting EPS of NT$0.1.

UMC saw its foreign-exchange losses expand to NT$517 million last quarter from NT$496 million in the prior quarter, company data showed.

“Utilization rates at our 8-inch fabs as well as 12-inch advanced nodes were near full capacity, driven by the strength in the consumer and communication segments [in the first quarter],” UMC chief executive official Yen Po-wen (顏博文) told an investors’ teleconference.

However, the company expects wafer shipments for this quarter to be flattish, Yen said.

Average selling prices will be also little changed in US dollar terms, he said.

“A pickup in the mature 12-inch wafer business due to higher demand from wireless, Internet of things and consumer electronics .... will be offset by a decline in the 28-nanometer [nm] business,” Yen said.

“It is a challenge to boost 28nm wafer demand given our very concentrated client base,” he said.

Nonetheless, UMC is sticking to its target of expanding 28nm technology’s revenue share to 20 percent in the fourth quarter, from 17 percent last quarter, he said.

Gross margin is expected to fall to the mid-teens percentage, Yen forecast.

That compares with 19.9 percent last quarter.

Yen also talked about the company’s technology roadmap, with UMC starting to ship 14nm wafers to a client in the first quarter and volume expected to increase this quarter as it adds about four or five more clients.

The company is considering developing 22nm process technology to cater to clients, following in the steps of its bigger rival Taiwan Semiconductor Manufacturing Co (台積電), Yen said.

UMC plans to spend US$2 billion on capital expenditure this year.

In other news, Siliconware Precision Industries Co Ltd (矽品精密), the world’s third-largest chip tester and packager, yesterday said that first-quarter earnings plunged 65 percent to NT$1 billion from NT$2.83 billion in the fourth quarter of last year.

That marked the weakest earnings in five quarters.

Gross margin slid to 19.2 percent last quarter from 23.6 percent a quarter ago, mainly due to the impact of a stronger New Taiwan dollar.

The local currency’s appreciation also resulted in a foreign-exchange loss of NT$310 million last quarter, the company said.

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