United Microelectronics Corp (UMC, 聯電), the world’s No. 3 contract chipmaker, yesterday projected that its factory utilization would dip further to about 65 percent this quarter, after an inventory-driven industry slump pushed its second-quarter net profit to its weakest level in eight quarters.
UMC, which has not seen its factory utilization rate fall to as low as 65 percent since the fourth quarter of 2011, said it was difficult to predict if the rate would bottom out this quarter, as customers are expected to extend inventory destocking to next quarter, while end-market demand remains sluggish.
However, the company expects utilization of its 22-nanometer and 28-nanometer process technologies to remain resilient this quarter, thanks to a broad customer base and diverse product offerings.
Photo: David Chang, EPA-EFE
UMC said it would continue to expand its 28-nanometer capacity in Tainan, as most of the capacity is covered by long-term supply agreements with customers.
“Wafer demand outlook in the third quarter is uncertain, given prolonged inventory correction in the supply chain,” UMC chief executive officer Jason Wang (王石) told investors.
Inventory digestion in the smartphone, computer and server sectors has fallen short of the company’s expectations, Wang said.
“While we saw spots of limited recovery in the second quarter, overall end-market sentiment remained weak and we expect customers to continue stringent inventory management in the near term,” he said.
UMC expects wafer shipments to drop by about 3 to 4 percent sequentially this quarter, while average selling prices would rise about 2 percent.
Gross margin this quarter would slide 1 to 3 percentage points from 36 percent last quarter due to higher manufacturing costs, including electricity, raw materials and labor.
Net profit fell 3.3 percent to NT$15.64 billion (US$500.4 million) last quarter, compared with NT$16.18 billion in the first quarter and NT$21.33 billion a year earlier.
Earnings per share dropped to NT$1.27 from NT$1.31 in the first quarter and NT$1.74 a year earlier.
UMC yesterday further revised down its forecast for world semiconductor revenue this year, projecting an annual decline of about 5 percent, instead of the drop of 1 to 3 percent it estimated in April.
The foundry sector would see an even sharper drop of 15 percent compared with its earlier estimate of a high-single-digit percentage decline this year, it said.
Nonetheless, UMC would double its silicon interposer wafer capacity, which is used in advanced chip packaging technology, by the middle of next year to cope with growing demand for artificial intelligence chips, Wang said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) secured a record 70.2 percent share of the global foundry business in the second quarter, up from 67.6 percent the previous quarter, and continued widening its lead over second-placed Samsung Electronics Co, TrendForce Corp (集邦科技) said on Monday. TSMC posted US$30.24 billion in sales in the April-to-June period, up 18.5 percent from the previous quarter, driven by major smartphone customers entering their ramp-up cycle and robust demand for artificial intelligence chips, laptops and PCs, which boosted wafer shipments and average selling prices, TrendForce said in a report. Samsung’s sales also grew in the second quarter, up
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