UMC report hurts stocks

Taiwan stocks fell, led by United Microelectronics Corp (UMC, 聯電), on a newspaper report, denied by the company, that the chipmaker will shut two semiconductor plants as orders slumped.

The TWSE Index fell 56.73, or 1.2 percent, to 4768.55, the index's seventh fall in eight days. Five stocks fell for every three that rose. The total value of shares traded was NT$33.4 billion (US$968 million), less than half the NT$82.4 billion daily average this year.

"We have a bearish view toward demand through to 2002" for chipmakers, said Janardan Menon, the head of Asian Technology research at Kleinwort Benson Securities (Asia) Ltd in Hong Kong.

Taiwan is the worst performing stock market in the world in the last three months, down 22 percent in US dollar terms.

The following stocks made significant gains or losses: UMC fell NT$1.50, or 3.3 percent, to NT$44.40. The second-biggest made-to-order chipmaker will temporarily close two of its plants as orders dry up, the Economic Daily reported, without citing anyone. Alex Hinnawi, a UMC spokesman, said the report wasn't true. Shares in Xilinx Inc, a UMC customer, fell 9 percent yesterday.

Some banks fell on concern their non-performing loans will rise and their earnings will continue to deteriorate as economic conditions worsen. "If NPLs [non-performing loans] are a problem, then earnings and loan growth will also be" in the third quarter, said Sophia Cheng, the banking analyst at Merrill Lynch Taiwan Ltd.

Chinatrust Commercial Bank (中國信託商銀), Taiwan's second-biggest bank by market value, fell 70 cents, or 2.9 percent, to NT$23.90. International Commercial Bank of China (中國國際商銀), the fourth-biggest lender by market value on the island, fell US$0.70, or 3.2 percent, to NT$21.40. United World Chinese Commercial Bank (世華商銀), the sixth biggest lender by market value in Taiwan, fell US$0.20, or 1 percent, to NT$20.70.

Advanced Semiconductor Engineering Inc. (日月光半導體) fell US$0.80, or 3.7 percent, to NT$21. The chip packager plans to open two chip-packaging plants in China to tap growing demand in the third-largest semiconductor market, the Electronic Buyers' News Web site said, citing company officials in the US.

Chunghwa Telecom Ltd. (中華電信) fell US$0.60, or 1.2 percent, to NT$48, a record closing low. Analysts forecast the island's biggest phone company will experience deteriorating sale from competition from three new fixed line competitors, while mobile sales are expected to deteriorate in line with a slowing economy. The economy grew 1.1 percent in the first-quarter, the slowest pace in more than 26 years. The stock has dropped 54 percent since it began trading Oct. 26.

Compal Electronics Corp. (仁寶電子) fell US$0.80, or 2.1 percent, to NT$36.50. A fire at Compal Communications Inc, a unit of Compal Electronics, destroyed one production line, though the fire has been put out. The fire will cut June sales by NT$10 million at Compal Communications.

Yageo Corp (國巨) fell NT$1, or 3.4 percent, to NT$28.50. Margins at the largest maker of parts that control the flow of electricity into circuits are likely to deteriorate as supply will outstrip demand this year, said Alex Weng, a salesman at SG Securities Ltd in Taipei.