United Microelectronics Corp (UMC, 聯電) yesterday reported record net profit for last quarter, saying that it expects revenue to remain little changed this quarter, as robust demand for chips used in vehicles, servers and industrial devices would help offset weakness in smartphones, TVs and PCs.
Overall factory utilization including 8-inch fabs would be at full capacity this quarter and stay at a healthy level next quarter, the world’s third-largest foundry service provider said.
Wafer prices would remain “firm” through the second half of this year, following seven straight quarters of price increases, UMC said.
Photo: Grace Hung, Taipei Times
The company is confident that it will reach its revenue growth target this year, as it aims to grow its revenue at least on par with the foundry industry’s annual revenue growth rate of more than 20 percent, UMC president Jason Wang (王石) told investors during a conference call yesterday.
“While we observe soft demand in smartphones, notebook computers and consumer electronics, other segments such as networking, industrial and automotive have stable demand,” Wang said.
UMC said customers have become “conservative in general” and inventory levels are relatively high in certain segments.
Wang said that the semiconductor industry is undergoing an inventory correction-driven downturn following two years of upcycles.
To digest excessive inventory, a minimal number of customers faced penalty payments as they failed to fully honor their long-term supply agreements with UMC, Wang said.
However, the number of such agreements is still on the rise for UMC’s new capacity in Singapore, he said.
The chipmaker has no plans to cut its capital expenditure because of the short-term industry headwinds, Wang said.
UMC is planning to spend US$3.6 billion on new facilities and equipment this year.
The spending would mostly be used to fund the construction of a new manufacturing facility in Tainan, dubbed P6, in preparation for the start of mass production in June next year.
The facility would add about 5 percent to UMC’s capacity next year, it said.
Deploying 14-nanometer capacity would not be less of a priority for UMC, Wang said.
UMC’s 22-nanometer and 28-nanometer technologies are the most advanced that the company offers, accounting for 22 percent of its total revenue last quarter.
For this quarter, UMC expects wafer shipments to be flat from last quarter.
Gross margin would drop to about 45 percent this quarter from 46.5 percent last quarter, it said.
Net profit last quarter soared 78.6 percent year-on-year to NT$21.33 billion (US$712.6 million) from NT$11.94 billion in the same period last year, benefiting from strong demand across all end markets.
On a quarterly basis, net profit increased 7.7 percent from NT$19.81 billion.
Earnings per share rose to NT$1.74 last quarter, from NT$0.98 a year earlier and NT$1.61 in the previous quarter.
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