Contract chipmaker United Microelectronics Co (UMC, 聯電) yesterday reported its best quarterly profit in one-and-a-half years, thanks to improving demand for computer and communications chips.
Net income last quarter jumped 31 percent to NT$3.84 billion (US$127.36 million), compared with NT$2.93 billion in the third quarter last year and losses of NT$1.71 billion in the fourth quarter of 2018.
Saying its business should benefit from growing demand for 5G-related chips, UMC gave an upbeat outlook for revenue this year.
Chips used in sub-6 gigahertz base stations, radio frequency chips, power management chips and driver ICs for higher-definition OLED panels for smartphones should increase in line with the increasing deployment of 5G networks worldwide, UMC said.
The chipmaker expects its annual revenue to outpace the foundry sector’s forecast growth of a high single-digit percentage, bolstered by contributions from a 12-inch Japanese fab it acquired from Fujitsu Semiconductor Ltd last year, UMC copresident Jason Wang (王石) told investors.
Its revenue last year contracted 2 percent to NT$148.2 billion from NT$151.25 billion in the previous year.
The company expects global semiconductor sales to grow by about 5 percent this year.
“For the first quarter of 2020, based on customer forecasts, the overall business outlook appears to be similar with the previous quarter, primarily due to stable wafer demand from the wireless communications and computer peripheral segments,” Wang said.
The rising demand for 5G and Internet-of-Things applications is expected to generate additional semiconductor demand, specifically in wireless devices, as well as power management, further benefiting UMC, Wang said.
The 2019 novel coronavirus outbreak in China is not expected to affect UMC’s orders this quarter, he said, citing information from customers.
However, should the epidemic worsen, it could imperil the semiconductor supply chain in China, he said.
UMC is closely monitoring its development, he added.
Bigger rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it did not expect any impact from the newly imposed transportation restrictions in Nanjing, China, as the virus spread.
TSMC, the world’s largest contract chipmaker, said that its 12-inch fab in the city is operating normally.
UMC said it expects revenue to be little changed in the current quarter from last quarter, given flattish wafer shipments and average selling prices in US dollar terms.
Gross margin is estimated to slide to about 15 percent from 16.7 percent last quarter, it said.
The company plans a capital expenditure of US$1 billion, compared with last year’s US$600 million.
One-third of the capital is to be spent on boosting the capacity of its 28-nanometer fab in Xiamen, China.
Addressing questions about plans to expand capacity in the face of an industrywide oversupply, UMC said that the fab is only 70 percent equipped with machinery and expanding it would boost its profitability.
The company added that it does not expect a quick rebound in utilization as its 28-nanometer technology is still in “recovery mode.”
INCOMING FIX: While a date for updates has not been given, Apple said that the latest overheating incidents might be the result of apps and account data transfers Apple Inc on Saturday said that recent claims of new iPhones getting too hot to the touch are due to software and app-related bugs, and that fixes are coming soon. The company said the device can get warm in the first few days as it works overtime to get set up and restore a user’s data, due to a bug in the latest iOS 17 software, and because of some third-party apps overloading the system. Apple told Bloomberg it is working with developers behind the apps causing the iPhone to overheat and that fixes are in the process of being released.
MODERATING: A Caixin Insight analyst said China’s macroeconomy is recovering, albeit at a slow pace, but private businesses and exporters are still under pressure A private gauge of China’s manufacturing activity slowed its pace of expansion last month, suggesting there is still room for caution as the nation charts its economic trajectory for the rest of the year. The Caixin manufacturing purchasing managers’ index (PMI) was 50.6 last month, Caixin and S&P Global said in a statement yesterday — dipping closer to the 50 line, below which indicates contraction from the month before. Caixin’s services index was 50.2 for the month, still in expansion but also suggesting that the pace of growth in activity is losing momentum. The figures show a slightly precarious recovery even
Micron Technology Inc on Wednesday predicted a steeper loss than anticipated in the current quarter, indicating that an industry slump is still weighing on the largest US maker of memory chips. The company projected a fiscal first-quarter loss of as much as US$1.14 a share, excluding some items. Analysts had estimated a US$0.96 loss. On the bright side, revenue is expected to start recovering in the period. Micron predicted sales of US$4.2 billion to US$4.6 billion, compared with an estimate of US$4.21 billion. For Micron and competitors Samsung Electronics Co and SK Hynix Inc, this year has been brutal. Customers in their
CONSOLIDATION: Asustek has inked a deal with Intel to sell Intel’s NUC products; it is planning to combine its mini-PC business and expand the number of engineers Asustek Computer Inc (華碩) yesterday signed an agreement with Intel Corp to take over the US chip giant’s compact computer business, dubbed the “next unit of computing” (NUC), allowing Asustek to design, manufacture and sell Intel’s 10th to 13th-generation NUC product lines. Asustek has created a new NUC business unit to develop future generations of NUC products and to handle Intel’s NUC clients, mostly PC vendors, Asustek said. Asustek plans to combine its existing mini-PC business with the new NUC unit, leading to a further workforce expansion from about 160 engineers at present. Based on the agreement, Asustek does not own the