United Microelectronics Corp (UMC,
UMC, the second-largest maker of semiconductors for brand-name companies, said it will make most of Conexant's chips for wireless communications, consumer electronics and personal computing. The company would take orders away from rival Chartered Semiconductor Manufacturing Ltd (特許), analysts said.
While the contract with Conexant, which had sales of US$2.1 billion last year, will help UMC in the longer term, some investors said they do not see any immediate gains given the slump in demand for communications chips. UMC shares are too expensive, they said.
"UMC's capacity use may improve," said Michael Yeh, who helps manage NT$300 million (US$9 million) in equities, about 6 percent of which are UMC shares. "But that won't drive me to buy more UMC stock."
UMC currently uses 30 percent of its capacity, the company said during its second-quarter earnings announcement in July.
Communications chips accounted for about a third of UMC's production in the second quarter, falling from about half in the first quarter.
Earlier this year, Conexant said it would close most of its silicon wafer factories and farm out production to companies such as UMC to cut costs. Conexant also has manufacturing partnerships with Taiwan Semiconductor Manufacturing Corp (TSMC, 台積電) and Chartered Semiconductor. As TSMC has a separate contract with Conexant for specialized wafers, the UMC contract will hurt Chartered the most, some analysts said.
"The real threat is not just losing capacity utilization, but losing orders at the advanced technology end of your business," said Mark Baughan, an analyst with Deutsche Securities Asia Ltd. "That's Chartered's situation."
Three of Conexant's units that account for more than 75 percent of the company's revenue will order most of their silicon wafers from UMC, Conexant said. Conexant will continue to make its own communications chips that use two special semiconductor materials called silicon germanium and gallium arsenide, Conexant spokeswoman Gwen Carlson said.
Silicon germanium and gallium arsenide chips are used in wireless communications devices such as mobile phones for high frequency transmission.
Conexant's existing agreement with TSMC as a supplier of silicon germanium chips will not be affected by the agreement with UMC, Carlson said.
A Conexant unit that accounts for about a quarter of the company's revenue and makes chips for Internet networking equipment is still in negotiations with an outside chip supplier for a long-term agreement, Carlson said.
UMC shares fell 0.7 percent on the Taiwan Stock Exchange, while TSMC fell 0.8 percent. Chartered shares in Singapore declined as much as 4.1 percent.
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
RSS