Net profits spiked last quarter as strong demand for 28-nanometer (nm) chips used in mobile phones boosted margins, United Microelectronics Corp (UMC, 聯電) said yesterday.
Net profits surged to NT$2.58 billion (US$8.05 million) during the quarter that ended on June 30, compared with NT$210 million in the previous quarter, the world’s No. 2 contract chipmaker said.
Gross margin climbed from 14.6 percent in the last quarter to 22.4 percent, while operating margin swung back to 6.6 percent from minus-0.1 percent, UMC said.
Demand also picked up after supply chain inventory digestion ended, it said.
“As the latest semiconductor inventory cycle came to an end, the second quarter reflected a return to semiconductor seasonality as chip demand improved,” chief executive Yen Po-wen (顏博文) told investors.
“Many of the chips in newly released smartphone models use our 28nm solutions, which helped spur our 28nm revenue growth that began in the second quarter,” Yen said.
UMC expects growth momentum to extend into this quarter, which could help boost revenues by up to 3 percent from last quarter’s NT$37 billion.
Revenue contribution from 28nm chips will continue to rise to 20 percent or even higher, compared with 17 percent last quarter and 8 percent in the first quarter, Yen said.
Solid 28nm demand will also boost the utilization rate of 28nm equipment to 95 percent this quarter and through the rest of this year, compared with more than 75 percent last quarter, Yen said.
UMC plans to speed up capacity expansion by boosting 28nm chip capacity to 45,000 wafers per month next year from about 30,000 wafers at end of this year, Yen said.
The company’s capital spending plan remains the same for this year at US$2.2 billion.
However, weakening demand for less advanced chips such as those used in large-size driver ICs will drag down overall factory utilization to about 85 percent this quarter, from 89 percent last quarter, Yen said.
Gross margin this quarter will also drop to 20 percent, on lower factory usage and higher operating expenses for its new 12-inch fab in Xiamen, China.
UMC expects the Xiamen factory to start generating revenues in December.
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