Firms in Hsinchu Science Park consider paid leave

HERE WE Go AGAIN::Park officials declined to name the eight firms encouraging annual leave, but UMC, the No. 2 contract chipmaker in the world, said it was one of them

Staff Writer, with CNA

Thu, Oct 13, 2011 - Page 11

The Hsinchu Science Park (新竹科學園區), which houses major high-tech companies, said yesterday that eight firms in the park have recently encouraged their employees to take annual leave in a bid to cut production amid slowing global demand.

However, none of the more than 460 firms have yet forced their workers to take unpaid leave as many did during the financial crisis in 2008, the park administration said.

The eight companies encouraging annual leave are in the foundry business, the light-emitting diode sector, the dynamic random access memory (DRAM) industry, the flat panel business and the solar energy business, according to a recent survey by the science park.

Employees at the eight firms are scheduling their annual leave, an arrangement that is allowed under local labor regulations because it would involve paid leave, the park administration said.

With Taiwan’s exports showing signs of a slowdown as a result of weakening global demand, there have been fears that the domestic high-tech sector — the backbone of the nation’s exports — would have to resort to involuntary furloughs to deal with unfavorable market conditions.

On Friday last week, the -Ministry of Finance reported that -Taiwan’s exports fell 4.6 percent to US$24.61 billion last month from August, the lowest of any month this year.

The science park yesterday declined to disclose the names of the eight companies, but United Microelectronics Corp (UMC, 聯電), the world’s second-largest contract chipmaker, said it was one of them and that it is aiming to cut production to weather the current downturn in the global high-tech sector.

Market analysts said UMC’s capacity utilization fell to about 70 percent in the third quarter of this year from 90 percent in the first quarter.

Barclays Capital analyst Andrew Lu (陸行之) said in a report on Tuesday that UMC could face losses in the first quarter of next year as the result of an impending supply glut.

The lower utilization rate also caused Barclays to lower its earnings per share forecast for UMC by 20 percent to NT$0.67 this year and by 38 percent to NT$0.8 for next year, retaining its target price of NT$10.5 for the stock.

UMC’s shares were unchanged at NT$12.15 yesterday.

The company’s sales reached NT$8.18 billion (US$269 million) last month, down 0.29 percent from August and down 25.29 percent from a year earlier. Last month’s figure was the lowest in 28 months.

Last year, the Hsinchu Science Park generated NT$1.19 trillion in sales, with the semiconductor industry accounting for 68 percent of total revenue, followed by optoelectronics, computers and peripherals, communications, precision machinery and biotech.