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UMC sees sales, capacity utilization falls in Q2

Posted: 29 Apr 2005 ?? ?Print Version ?Bookmark and Share


Foundry United Microelectronics Corp. predicted that its sales would continue to fall in the second quarter of 2005, driving the foundry to the brink of a gross loss as its manufacturing capacity utilization drops to about 60 percent.

The company gave the outlook as part of its first quarter financial results saying wafer shipments would increase by low single-digit percentage points at the same time as the average selling price of its wafers - in U.S. dollar terms - would decline by high single-digit percentage points. UMC predicted that the consumer segment would be strongest in the second quarter while the computer segment is expected to show a seasonal slowdown.

Nonetheless, the company confirmed its established capital spending budget for 2005 of between $1 billion and $1.5 billion.

In the first quarter of 2005 UMC increased its net income 14.0 percent sequentially to NT$1.52 billion (about $48 million) despite a 28.1 percent sequential decline in revenue to NT$20.29 billion (about $643 million).

The increased profit was mainly due to non-operational income of NT$1.21 billion. Wafer shipments declined in the quarter by 14 percent sequentially to 564,000 200-mm diameter equivalent wafers, UMC said. The utilization rate for the quarter was 63 percent, after factoring in a 6 percent loss of available productivity due to scheduled annual maintenance, UMC said.

"The first quarter was a challenging period for UMC. Our results reflected the anticipated soft demand caused by the industry-wide inventory correction," said Jackson Hu, UMC's chief executive officer, in a statement. Hu continued "Over the course of the first quarter, we believe some of our customers have streamlined their inventories, especially in the consumer sector. Heading into the second quarter, we foresee a mild recovery in shipment volumes, which is a very positive sign for our business and leads us to believe that we have hit the bottom of the cycle."

Hu went on to say that 12 customers are using UMC's 90nm manufacturing processes and over 50 integrated circuits have taped-out. "We also believe that we are leading in the development of further generation technologies such as 80nm, 65nm and 45nm processes. Though we had some setbacks with the 0.13?m generation that slowed our growth, our decision to develop 90nm technology in-house has already given us an excellent start, especially with the successful ramp-up of 90nm volume production for communication customers."

Hu said that UMC's success with 90nm production would have a large impact on the foundry's profit in the next year or two.

- Peter Clarke

EE Times

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