Thu, Jun 13, 2019 - Page 12 News List

UMC conservative on second-half outlook

By Lisa Wang  /  Staff reporter, in Hsinchu

United Microelectronics Corp (UMC, 聯電), the world’s No. 3 contract chipmaker, yesterday said it is cautious about customer demand in the second half of the year as US-China trade tensions continue to cast a shadow over the global economy.

UMC said its goal is to safeguard its 9 percent share of the global foundry market this year, indicating that the chipmaker has to match its peers’ revenue growth to reach that goal.

“We are concerned about the second half [outlook], mainly because of numerous erratic factors,” UMC chief financial officer Liu Chitung (劉啟東) told reporters on the sidelines of the chipmaker’s annual shareholders’ meeting in Hsinchu. “Customers have also become more conservative.”

Most companies are adjusting themselves to adapt to the high macroeconomic uncertainty as the “visibility is vague,” he said.

Under such a conservative aura, UMC would be more cautious on spending as a precaution, he said.

The company said it is on track to meet its second-quarter targets of 6 percent growth in wafer shipments and 3 percent growth in average selling price on a quarterly basis.

“We believe the first quarter was the trough and that business in the second quarter would grow from the first quarter. We are still hoping that the third quarter would be, somehow, a peak season like usual,” Liu said.

Asked about any potential impact from the US blacklisting Huawei Technologies Co (華為), Liu said: “None of our major clients are on the blacklist.”

UMC said it was sticking to its capital spending plan of US$1 billion, which is higher than last year’s US$650 million.

The bulk of that budget is earmarked for development of 12-inch fabs, it said.

The company said it is not planning to allocate resources to develop cutting-edge 7-nanometer and 5-nanometer technologies, but would enhance existing technologies to address potential demand for 5G, automotive and the Internet of Things applications.

UMC last year spent NT$13.03 billion (US$414.57 million) on research and development, with a headcount of 1,500, it said.

Shareholders yesterday approved a plan to distribute a cash dividend of NT$0.58 per common share, representing a 100 percent payout ratio, as the chipmaker made NT$0.58 in earnings per share last year.

It also translates into a dividend yield of 4.28 percent based on yesterday’s closing price of NT$13.55.

The company said it applied in March with the Chinese stock market regulator to trade shares of its Chinese subsidiary Hejian Technology (Suzhou) Co (和艦科技) on the NASDAQ-style start-up board of the Shanghai Stock Exchange.

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