United Microelectronics Corp (UMC, 聯電) yesterday posted its weakest quarterly net profit in five quarters, as chip demand for most applications slackened amid a longer-than-expected inventory correction.
Net profit declined 18.3 percent annually to NT$16.18 billion (US$526.6 million) in the first quarter of this year from NT$19.81 billion in the same quarter last year and 15.1 percent from NT$19.07 billion in the previous quarter, the world’s third-largest foundry service provider said.
Earnings per share dropped to NT$1.31 from NT$1.61 a year earlier and NT$1.54 a quarter earlier.
Photo: Lam Yik Fei, Bloomberg
Gross margin dropped to 35.5 percent from 42.9 percent in the previous quarter and 43.4 percent a year earlier, marking the lowest level in seven quarters.
“In the first quarter of 2023, our business was impacted by sluggish wafer demand as customers continued to digest elevated inventory levels,” UMC copresident Jason Wang (王石) told investors at an online conference yesterday.
The business outlook remains bleak, as the Hsinchu-based chipmaker said this year would be a “very challenging year.”
“The market will be much weaker than we anticipated. Recovery is much slower than we expected,” Wang said.
UMC said the foundry sector would see revenue declining by a high-single-digit percentage from a year earlier — worse than forecast three month earlier, when it expected a mid-single-digit percentage decline.
The global semiconductor industry would see a mid-single-digit percentage decline in revenue this year, rather than its previous prediction of a low-single-digit percentage drop, UMC said.
“Given the weaker-than-expected end-market environment, we see the pace of inventory digestion move slower than expected. We have not seen any signs of strong recovery for the second half yet,” although the company’s revenue hit the bottom last quarter, Wang said.
For this quarter, UMC expects wafer shipments to be flat from last quarter.
Demand outlook for all segments, including PCs, and communication and consumer electronics, would also be flat sequentially, it said.
Wang said that replenishing demand for automotive chips peaked last quarter, after two quarters of robust growth.
Automotive chips, which accounted for 17 percent of the company’s revenue last quarter, would be a major growth driver in the long term, UMC said.
Gross margin is expected to stabilize at about 35 percent this quarter, with average selling prices remaining flat from last quarter, the chipmaker said.
Overall factory utilization would be slightly above 70 percent, little changed from last quarter, it said.
The utilization of 28-nanometer technology would gradually rise to above 90 percent in the second half of this year, Wang said.
UMC said it uses 28-nanometer technology to make OLED driver ICs, TV chips and Wi-Fi 6 chips, adding that the technology contributed 26 percent to its revenue last quarter.
UMC said it would keep its capital budget at US$3 billion this year, but is ready for potential downward adjustments in accordance with market demand.
The chipmaker said that its new factory in Tainan, dubbed P6, would increase production next quarter.
The fab would produce chips under long-term supply agreements with customers, UMC said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) founder Morris Chang (張忠謀) yesterday said that Intel Corp would find itself in the same predicament as it did four years ago if its board does not come up with a core business strategy. Chang made the remarks in response to reporters’ questions about the ailing US chipmaker, once an archrival of TSMC, during a news conference in Taipei for the launch of the second volume of his autobiography. Intel unexpectedly announced the immediate retirement of former chief executive officer Pat Gelsinger last week, ending his nearly four-year tenure and ending his attempts to revive the
WORLD DOMINATION: TSMC’s lead over second-placed Samsung has grown as the latter faces increased Chinese competition and the end of clients’ product life cycles Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) retained the No. 1 title in the global pure-play wafer foundry business in the third quarter of this year, seeing its market share growing to 64.9 percent to leave South Korea’s Samsung Electronics Co, the No. 2 supplier, further behind, Taipei-based TrendForce Corp (集邦科技) said in a report. TSMC posted US$23.53 billion in sales in the July-September period, up 13.0 percent from a quarter earlier, which boosted its market share to 64.9 percent, up from 62.3 percent in the second quarter, the report issued on Monday last week showed. TSMC benefited from the debut of flagship
A former ASML Holding NV employee is facing a lawsuit in the Netherlands over suspected theft of trade secrets, Dutch public broadcaster NOS said, in the latest breach of the maker of advanced chip-manufacturing equipment. The 43-year-old Russian engineer, who is suspected of stealing documents such as microchip manuals from ASML, is expected to appear at a court in Rotterdam today, NOS reported on Friday. He is accused of multiple violations of the sanctions legislation and has been given a 20-year entry ban by the Dutch government, the report said. The Dutch company makes machines needed to produce high-end chips that power
As South Korea descends into political chaos, its equity market risks falling further behind major tech rival Taiwan, which is basking in the glory of a global artificial intelligence (AI) boom. A near-30 percent surge in Taiwan’s stock benchmark this year, set to be the best since 2009, has already helped spur a historic divergence between Asia’s two tech-dominated markets. The nation’s market capitalization now exceeds South Korea’s by about US$950 billion as the world’s AI frontrunners from Nvidia Corp and Microsoft Corp to OpenAI all increasingly turn to Taiwanese firms for supply. Looking ahead to next year, while both export-oriented economies
RSS