United Microelectronics Corp (UMC, 聯電), the world’s No. 3 contract chipmaker, yesterday reported its weakest net profit in seven quarters due to sluggish demand for mobile phone chips and its advanced 28-nanometer (nm) chips.
Net profit last quarter plunged 30.5 percent to NT$1.77 billion (US$60.41 million), compared with NT$2.55 billion in the same period of 2016, the company’s financial statement showed.
That also represented a quarterly contraction of 50 percent from NT$3.47 billion, due to a significant decline in investment gains, the statement said.
UMC expects revenue to be little changed this quarter from last quarter’s NT$36.63 billion as robust overall demand should offset continuing weakness in 28-nanometer chips.
“During the [fourth] quarter, our capacity utilization from legacy 8” and 12” technologies continued to reflect robust demand, despite a decrease in 28nm HKMG contribution,” UMC copresident Jason Wang (王石) told a teleconference.
“Looking into the first quarter of 2018, we anticipate our foundry business to remain relatively flat,” Wang said.
The company said that operating income would only break even this quarter from NT$1.9 billion last quarter due to a lower gross margin.
The downward spiral in gross margin is to extend to between 13 and 14 percent this quarter from 17.2 percent last quarter, Wang said, adding that capacity utilization rate this quarter would remain at about 90 percent after falling from 96 percent in the third quarter last year.
“We have high hopes for a rebound for our 28nm technology in the second half,” Wang said, adding that the company is continuing efforts to secure new design opportunities and rebuild its 28-nanometer business momentum.
UMC’s wafer shipments are forecast to grow 2 to 4 percent quarterly, but average selling prices are to fall 2 percent in US dollar terms, he said.
The company plans to trim capital expenditure by about 24 percent to US$1.1 billion this year from last year’s US$1.44 billion, after shifting its strategy to seek justifiable returns on investment rather than pure revenue growth, he said.
UMC expects revenue this year to grow at a slower pace than the high-single-digit-percentage growth estimated for the overall foundry industry, Wang said.
Revenue last year rose 1 percent to NT$149.29 billion from NT$147.87 billion a year earlier, with contribution from 28-nanometer chips dropping to 16 percent from 17 percent, while revenue from 14-nanometer chips made up 1 percent, mostly from increasing demand for cryptocurrency mining and artificial intelligence, company data showed.
Net profit last year climbed 15.8 percent year-on-year to NT$9.63 billion from NT$8.32 billion, with earnings per share rising to NT$0.79 from NT$0.6.
Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday. Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year. CAUTION ON CHINA However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
RISING: Strong exports, and life insurance companies’ efforts to manage currency risks indicates the NT dollar would eventually pass the 29 level, an expert said The New Taiwan dollar yesterday rallied to its strongest in three years amid inflows to the nation’s stock market and broad-based weakness in the US dollar. Exporter sales of the US currency and a repatriation of funds from local asset managers also played a role, said two traders, who asked not to be identified as they were not authorized to speak publicly. State-owned banks were seen buying the greenback yesterday, but only at a moderate scale, the traders said. The local currency gained 0.77 percent, outperforming almost all of its Asian peers, to close at NT$29.165 per US dollar in Taipei trading yesterday. The
RECORD LOW: Global firms’ increased inventories, tariff disputes not yet impacting Taiwan and new graduates not yet entering the market contributed to the decrease Taiwan’s unemployment rate last month dropped to 3.3 percent, the lowest for the month in 25 years, as strong exports and resilient domestic demand boosted hiring across various sectors, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. After seasonal adjustments, the jobless rate eased to 3.34 percent, the best performance in 24 years, suggesting a stable labor market, although a mild increase is expected with the graduation season from this month through August, the statistics agency said. “Potential shocks from tariff disputes between the US and China have yet to affect Taiwan’s job market,” Census Department Deputy Director Tan Wen-ling
RSS