United Microelectronics Corp (UMC, 聯電), the world’s second-largest contract chip manufacturer by revenue, yesterday said it posted NT$1.18 billion (US$40 million) in profit for the fourth quarter last year, down 39.6 percent from the previous quarter due to slower shipments.
Profit dropped 82 percent from 2010, while revenue declined 3 percent quarter-on-quarter, or 22 percent year-on-year, to NT$24.43 billion, the company said.
The revenue drop was caused by a 10 percent drop in fourth-quarter shipments, chief executive Sun Shih-wei (孫世偉) told investors at a conference.
For the whole of last year, net income was NT$10.8 billion, or NT$0.86 per share — a plunge of 54.8 percent from NT$23.9 billion, or NT$1.91 per share, a year ago.
Revenue last year decreased 12.1 percent to NT$105.88 billion.
UMC expects revenue this quarter to dip slightly from the fourth quarter, even though chip-wafer shipments are projected to increase slightly from the fourth quarter.
The average selling price this quarter may decrease 5 percent due to the changes of product mix, given that the firm will ship more 8-inch wafers than 12-inch wafers.
“There have been signs of the economy starting to bottom out, but how fast the recovery will be depends on the demand from end devices and performance of the macro economy,” Sun said.
UMC plans to spend US$2 billion on capital expenditure this year, more than the US$1.6 billion spent on technology migration and capacity expansion last year.
The increase comes as UMC plans to boost its advanced technologies, in particular the 28 nanometer (nm) wafers, which are expected to account for 5 percent of total shipments by the end of this year, Sun said. Forty nanometer wafers, which took up 10 percent of shipments late last year, would rise to 15 percent, he added.
Last year, advanced wafers, 65nm and below, already contributed 39 percent to total revenue. That was up from 27 percent in 2010.
The company said capacity utilization would remain in the high-60 percent range in the first quarter, compared with 68 percent in the fourth quarter.
Shares of UMC closed up 0.33 percent to NT$15.4 on the Taiwan Stock Exchange before the earnings announcement.
Bank of America Merrill Lynch said in a report on Monday last week that catalysts to UMC’s stock price this year include the further inventory reduction at fabless customers and downstream hardware companies, while its new customers and products in the first half of the year would help drive up utilization on its advanced fabs, especially 40nm and 28nm.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such