UMC upbeat on second quarter

The United Microelectronics Corp (UMC, 聯電) said yesterday it expects strong sales growth in the second quarter followed by continued and solid growth in the third quarter.

Robert Tsao (曹興誠), chairman of the country's second-biggest microchip maker, told reporters after a shareholders meeting that while he would rather not speculate on the final quarter, he was not pessimistic.

However, he said more precise estimate figures were not immediately available.

When asked to elaborate, UMC Spokesman Liu Chi-tung (劉啟東) said the company was looking at a minimum 40 percent sequential increase in second quarter parent sales, followed by double-digit percentage growth in the third.

With the company still taking orders for July and August, more precise guidance for the third quarter would be made at its investors' conference end-July, Liu added.

Despite a sales revenue decline last year, UMC has managed to offer a dividend of NT$1.5 per share, Tsao announced at yesterday's shareholders meeting.

Separately, Tsao said the company was not aware of the reasons behind the recent sell-off in UMC shares by foreign investors.

"But I do know this -- rumors that the company has encountered difficulty in technology transfer or experienced order cancellations by clients are not true."

He said UMC expects its growth momentum in the second and third quarters to be derived primarily from orders calling for advanced technology.

UMC in April said second-quarter factory use will rise to 70 percent from about 50 percent in the first quarter, because of growing demand for chips used in communications and consumer electronics such as DVD players.

Demand for UMC's most-advanced production capacity now exceeds supply, Tsao said.

UMC vice chairman and chief executive John Hsuan (宣明智) said the company is confident it has taken a leading edge in terms of transferring to 0.13 micron technology.

"Everybody is going through the same stage, that is, trial and then mass production. Who will prevail in this regard remains to be seen in the second half."

UMC in the first quarter started commercial production of chips with 0.13 micron-wide transistors, a process rivaled by only a few chipmakers such as Intel Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).

The technology allows more chips to be made from a single silicon wafer, cutting production costs.

As demand rises, UMC is boosting production of chips that use this technology and fetch better margins.

UMC said TSMC, its biggest rival, is having difficulty making such chips for customers such as Transmeta Corp, PMC-Sierra Inc and Broadcom Corp.

None of the three companies has transferred orders to UMC, Hsuan said.

"We don't fully know the situation with our competitor," said Hsuan.

"We have been hearing from our customers that TSMC is having problems."