Contract chipmaker United Microelectronics Co (UMC, 聯電) yesterday reported its best quarterly profit in one-and-a-half years, thanks to improving demand for computer and communications chips.
Net income last quarter jumped 31 percent to NT$3.84 billion (US$127.36 million), compared with NT$2.93 billion in the third quarter last year and losses of NT$1.71 billion in the fourth quarter of 2018.
Saying its business should benefit from growing demand for 5G-related chips, UMC gave an upbeat outlook for revenue this year.
Chips used in sub-6 gigahertz base stations, radio frequency chips, power management chips and driver ICs for higher-definition OLED panels for smartphones should increase in line with the increasing deployment of 5G networks worldwide, UMC said.
The chipmaker expects its annual revenue to outpace the foundry sector’s forecast growth of a high single-digit percentage, bolstered by contributions from a 12-inch Japanese fab it acquired from Fujitsu Semiconductor Ltd last year, UMC copresident Jason Wang (王石) told investors.
Its revenue last year contracted 2 percent to NT$148.2 billion from NT$151.25 billion in the previous year.
The company expects global semiconductor sales to grow by about 5 percent this year.
“For the first quarter of 2020, based on customer forecasts, the overall business outlook appears to be similar with the previous quarter, primarily due to stable wafer demand from the wireless communications and computer peripheral segments,” Wang said.
The rising demand for 5G and Internet-of-Things applications is expected to generate additional semiconductor demand, specifically in wireless devices, as well as power management, further benefiting UMC, Wang said.
The 2019 novel coronavirus outbreak in China is not expected to affect UMC’s orders this quarter, he said, citing information from customers.
However, should the epidemic worsen, it could imperil the semiconductor supply chain in China, he said.
UMC is closely monitoring its development, he added.
Bigger rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it did not expect any impact from the newly imposed transportation restrictions in Nanjing, China, as the virus spread.
TSMC, the world’s largest contract chipmaker, said that its 12-inch fab in the city is operating normally.
UMC said it expects revenue to be little changed in the current quarter from last quarter, given flattish wafer shipments and average selling prices in US dollar terms.
Gross margin is estimated to slide to about 15 percent from 16.7 percent last quarter, it said.
The company plans a capital expenditure of US$1 billion, compared with last year’s US$600 million.
One-third of the capital is to be spent on boosting the capacity of its 28-nanometer fab in Xiamen, China.
Addressing questions about plans to expand capacity in the face of an industrywide oversupply, UMC said that the fab is only 70 percent equipped with machinery and expanding it would boost its profitability.
The company added that it does not expect a quick rebound in utilization as its 28-nanometer technology is still in “recovery mode.”
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in artificial-intelligence (AI) chips, yesterday said that small-volume production of 3-nanometer (nm) chips for a key customer is on track to start by the end of this year, dismissing speculation about delays in producing advanced chips. As Alchip is transitioning from 7-nanometer and 5-nanometer process technology to 3 nanometers, investors and shareholders have been closely monitoring whether the company is navigating through such transition smoothly. “We are proceeding well in [building] this generation [of chips]. It appears to me that no revision will be required. We have achieved success in designing
PROJECTION: KGI Financial said that based on its foreign exchange exposure, a NT$0.1 increase in the New Taiwan dollar would negatively impact it by about NT$1.7 billion KGI Financial Holding Co (凱基金控) yesterday said its life insurance arm has increased hedging and adopted other moves to curb the impact of the local currency’s appreciation on its profitability. “It is difficult to accurately depict the hedging costs, which might vary from 7 percent to 40 percent in a single day,” KGI Life Insurance Co (凱基人壽) told an investors’ conference in Taipei. KGI Life, which underpinned 66 percent of the group’s total net income last year, has elevated hedging to 55 to 60 percent, while using a basket of currencies to manage currency volatility, the insurer said. As different
Taiwanese insurers are facing difficult questions about the damage of recent swings in the New Taiwan dollar. Regulators might have a partial solution: letting firms change how they calculate the value of foreign currency assets. The Financial Supervisory Commission (FSC) is considering allowing insurers to use six-month average exchange rates when they calculate risk-based capital in their semiannual reports, a shift from the current system where insurers use exchange rates on the final day of reporting. The change could ease pressure on the US$1.2 trillion insurance sector, whose huge exposure to foreign assets came into the spotlight earlier this month after a