United Microelectronics Corp (UMC, 聯電), the world's No. 2 contract chipmaker, announced third-quarter earnings yesterday that hit a three-year high driven by asset gains and stronger-than-expected rebound in demand for its chips.
But UMC appeared conservative about next year's forecasts.
The company said it planned to significantly reduce its capital spending next year from US$1 billion this year.
PHOTO: SAM YEH, AFP
In the third quarter, net income leapt more than 7 percent to NT$9.23 billion (US$285 million) from NT$8.59 billion a year earlier, or the best since the third quarter of 2004. Compared to last quarter, the growth is around 88 percent.
Some NT$5.76 billion, or 62 percent, of the third-quarter earnings came mainly from asset sales, including its stakeholdings in local handset chipmaker MediaTek Inc (
"Growth in shipments was higher than our previous forecast of 20 percent growth, meaning demand is better than we expected," company spokesman Liu Chi-tung (
PHOTO: SAM YEH, AFP
The Hsinchu-based chipmaker shipped 26.5 percent more chips in the third quarter to 1.02 million 8-inch wafers.
However, UMC expects shipments to drop 9 percent at quarterly rate this quarter on seasonal factors, especially slowing demand for handset related chips.
UMC supplies chips to the world's biggest handset chipmaker Texas Inc and chips used in Apple Inc's iPhones.
Chips used in communication devices made up 57 percent of UMC's overall revenues of NT$31.03 billion in the quarter ended Sept. 30.
"We are seeing seasonal correction," chairman Jackson Hu (
Factory usage may drop to 85 percent this quarter from 93 percent, Hu said.
Gross margins may decline to 20 percent from 26.5 percent last quarter partly due to a 1 percent quarter-on-quarter drop in average selling price, he said.
"The decline is much bigger than our expectation of a mid single-digit percent drop," said Eric Chen (陳慧明), a semiconductor analyst with BNP Paribas Securities' Taiwan branch.
Chen maintained his "hold" rating on UMC as the company was hit harder during downtrends than its bigger rival Taiwan Semiconductor Manufacturing Co (TSMC,
Commenting on possible reduction in capital spending next year, Chen said UMC may trim its spending by 20 percent to 30 percent compared to this year.
Strict control of capital spending would be the first step in making profits and would be one of the most important tasks rather than capacity competition, UMC said.
Separately, Hu said UMC would not rule out the possibility of manufacturing computer memory, or other special memory chips, aiming to boost utilization rate during the slack season.
Last month UMC announced that it had signed a cross license agreement with Tokyo-based memory chipmaker Elpida Memory Inc.
UMC shares were down 0.7 percent to NT$21.25 yesterday, better than the benchmark TAIEX's 0.48 percent loss.
Anna Bhobho, a 31-year-old housewife from rural Zimbabwe, was once a silent observer in her home, excluded from financial and family decisionmaking in the deeply patriarchal society. Today, she is a driver of change in her village, thanks to an electric tricycle she owns. In many parts of rural sub-Saharan Africa, women have long been excluded from mainstream economic activities such as operating public transportation. However, three-wheelers powered by green energy are reversing that trend, offering financial opportunities and a newfound sense of importance. “My husband now looks up to me to take care of a large chunk of expenses,
SECTOR LEADER: TSMC can increase capacity by as much as 20 percent or more in the advanced node part of the foundry market by 2030, an analyst said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to lead its peers in the advanced 2-nanometer process technology, despite competition from Samsung Electronics Co and Intel Corp, TrendForce Corp analyst Joanne Chiao (喬安) said. TSMC’s sophisticated products and its large production scale are expected to allow the company to continue dominating the global 2-nanometer process market this year, Chiao said. The world’s largest contract chipmaker is scheduled to begin mass production of chips made on the 2-nanometer process in its Hsinchu fab in the second half of this year. It would also hold a ceremony on Monday next week to
TECH CLUSTER: The US company’s new office is in the Shalun Smart Green Energy Science City, a new AI industry base and cybersecurity hub in southern Taiwan US chip designer Advanced Micro Devices Inc (AMD) yesterday launched an office in Tainan’s Gueiren District (歸仁), marking a significant milestone in the development of southern Taiwan’s artificial intelligence (AI) industry, the Tainan City Government said in a statement. AMD Taiwan general manager Vincent Chern (陳民皓) presided over the opening ceremony for the company’s new office at the Shalun Smart Green Energy Science City (沙崙智慧綠能科學城), a new AI industry base and cybersecurity hub in southern Taiwan. Facilities in the new office include an information processing center, and a research and development (R&D) center, the Tainan Economic Development Bureau said. The Ministry
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
RSS