Wed, Jan 30, 2019 - Page 12 News List

UMC posts first loss in decade

ONE-TIME COST:The chipmaker predicted zero growth in the foundry sector this year and gave a gloomy first-quarter outlook, as it expects even softer wafer demand

By Lisa Wang  /  Staff reporter

United Microelectronics Corp (UMC, 聯電) yesterday posted its first quarterly loss in about a decade as a one-time cost of NT$700 million (US$22.72 million) from a suspended DRAM project with China’s Fujian Jinhua Integrated Circuit Co (福建晉華) added to weakness in advanced chip demand.

The company has suspended all research and development for Fujian Jinhua and has idled all related equipment at a fab in Tainan, UMC copresident Jason Wang (王石) told an investors’ conference.

Defending against allegations that UMC stole technologies from Micron Technology Inc, Wang said that UMC has 15 years of DRAM manufacturing experience it accumulated from 1996 to 2010, and its DRAM team at one point included more than 150 people.

UMC is to vigorously defend itself against all false charges, Wang added.

The world’s No. 3 contract chipmaker reported losses of NT$1.71 billion for the quarter ending on Dec. 31, a reversal from a net profit of NT$1.72 billion registered in the previous quarter, the company’s financial statement showed.

Operating costs climbed 12 percent quarter-on-quarter to NT$6.4 billion primarily due to the booking of NT$700 million from the DRAM project, UMC said.

Average selling prices dipped mostly due to a significant decline in customer demand for 14-nanometer (nm) technology for cryptocurrency mining chips, the chipmaker said.

UMC said that 14nm chips only accounted for 1 percent of total revenue last quarter, down from 5 percent the previous quarter.

This year would be challenging for the semiconductor industry due to continuing weakness in smartphone demand and growing macroeconomic uncertainty stemming from trade tensions between the US and China, UMC said.

The chipmaker expects zero growth in the foundry sector this year, Wang said, adding that UMC’s performance would be in line with the sector.

Wang also gave a gloomy outlook for the current quarter.

“Looking into the first quarter of 2019, we anticipate further deceleration in wafer demand due to a softer-than-expected outlook in entry and mid-level smartphones, as well as falling cryptocurrency valuations,” Wang said.

Wafer shipments are to fall between 6 and 7 percent quarterly, Wang said.

The factory utilization rate would sink to near 80 percent from 88 percent, with 12-inch fabs nearing 70 percent, he said.

Lower factory usage would drive down gross margin to about 5 percent, while the average selling price would continue to drop by 1 to 2 percent sequentially in US dollar terms, he said.

The company has said it plans to spend US$1 billion on new equipment this year.

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