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UMC to cut spending, increase advanced capacity

Posted: 08 Feb 2002 ?? ?Print Version ?Bookmark and Share

Keywords:united microelectronics? umc? wafer?

United Microelectronics Corp. intends to cut capital spending this year by 27 percent, joining its foundry rivals in tightening purses for what they expect to be a slow recovery in 2002.

The foundry said it would cut spending to $800 million this year, down from $1.1 billion in 2001. That does not include the company's spending plans for its 200mm and 300mm wafer joint ventures in Japan and Singapore, which it treats as separate investments. The company said it may spend about $300 million more on those ventures.

UMC will see its capacity drop 21 percent this year, partially due to a sell-off of older 200mm lines capable of producing 35,000 wafers per month. UMC had planned to sell off even more equipment, but officials said Tuesday (Feb. 5) that they were putting the brakes on those plans for the near term.

UMC closed the book on its worst year ever on Tuesday since turning to the foundry model in the mid '90s, losing $107 million in the forth quarter on sales that dropped 56 percent from a year ago. The company said it lost $90 million for the year.

The company's sales and marketing chief, Fu-tai Liou, predicted the company will return to profitability in the second quarter as demand revives among its customers in the PC and wireless arenas. He maintained a cautious view on the return of wired line customers, saying that sector will still remain weak until at least the third quarter.

One of UMC's strategies this quarter is to boost capacity for finer geometries as it makes more aggressive moves to gain orders for high-performance graphics chips from companies such as Nvidia Corp. and ATI Technologies Inc. While about 50 percent of UMC's capacity can produce devices at 0.18 micron or finer geometries, only about 20 percent of the foundry's sales are from those nodes.

Liou said about 40 percent of the capital budget will go to upgrading 200mm lines while most of the balance will go to buying 300mm wafer tools.

Liou said he expects demand to heat up for 0.185m and 0.155m capacity in the next two quarters, at which point 0.135m will start to become a revenue sweet spot for the company. Currently, the company produces only about 10,000 wafers per month at 0.135m at Fab 8E and a small volume in Fab 12A, its 300mm wafer facility in southern Taiwan.

? Mike Clendenin

EE Times

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