United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday posted its strongest quarterly net profit in 14 years as work-from-home and remote-schooling trends continued to drive demand for power management chips used in smartphones and high-speed interface controllers.
Net profit last quarter soared 36.37 percent to NT$9.11 billion (US$315.07 million) from NT$6.68 billion in the second quarter.
That represented a 210 percent increase from NT$2.93 billion in the third quarter of last year.
Photo: Hung Yu-fang, Taipei Times
Earnings per share rose to NT$0.75, from NT$0.55 a quarter earlier and NT$0.25 a year earlier.
“Demand from consumer and computer-related applications will lead to a slight increase in wafer shipments, propelled by ongoing work-from-home initiatives and home schooling,” UMC copresident Jason Wang (王石) said.
“Furthermore, we have seen an uptick in semiconductor demand thanks to more silicon content in particular applications, such as newly launched 5G smartphones, Internet-of-Things devices and other consumer products,” he said.
UMC expects this to significantly increase demand for 28-nanometer chips this quarter, he added.
Overall, wafer shipments this quarter are expected to rise 1 to 2 percent from the third quarter, while the average sales price is expected to increase 1 percent and factory utilization to edge down from 97 percent in the third quarter to 95 percent, he said.
Gross margin is likely to remain flat from the third quarter’s 21.8 percent, due to the appreciation of New Taiwan dollar against the US dollar, Wang said.
Every 1 percent appreciation in the NT dollar reduces UMC’s gross margin by 0.5 percentage points, the chipmaker said.
“We expect this business traction to continue into 2021. Our overall business outlook is healthy. Our utilization rate will remain very high,” Wang said.
As the outlook for 8-inch wafers remains favorable for foundries, UMC plans to increase 8-inch wafer prices next year, while keeping prices for 12-inch wafers unchanged, he said.
This quarter, the price adjustment would only be applied to incremental orders, he added.
To resolve capacity issues, UMC is “carefully evaluating our capital for expansion and considering in what ways we should expand capacity to meet customer demand,” Wang said.
The firm is exploring whether it would be optimal to expand through an “organic” or “inorganic” approach, or through an acquisition, Wang said.
The firm’s board of directors yesterday authorized the management team to participate in bidding for potential investment targets.
The board also gave the go-ahead for an additional budget of NT$14.79 billion for new equipment purchases and working capital.
UMC’s capital expenditure this year remained US$1 billion.
The chipmaker plans to scale up 12-inch wafer capacity at its Xiamen fab in China to 25,000 wafers per month from 18,000 wafers, Wang said, adding that most of the new capacity would be for producing 28-nanometer chips.
UMC said it would seek order transfers after the US imposed export restrictions on China’s Semiconductor Manufacturing International Corp (中芯國際).
“It is our belief that it [geopolitical tension] will have some impact on the foundry landscape, particularly on customers’ sourcing strategies. Some customers are trying to diversify their foundry sourcing strategies,” Wang said.
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