United Microelectronics Co (UMC, 聯電), the world’s No. 3 contract chipmaker, yesterday raised its chip price forecast for this year to as high as 13 percent year-on-year, amid persistent supply constraints and an improved product portfolio.
The Hsinchu-based chipmaker adjusted its price forecast after posting a record net profit for last quarter, which soared 78.8 percent annually to NT$11.94 billion (US$426.35 million) from NT$6.68 billion a year earlier.
Three months ago, UMC said that its blended average selling price might rise by between a high-single-digit percent and 10 percent this year from last year.
Photo: David Chang, EPA-EFE
“The pricing trend and structural demand, we believe, are here to stay. Our customers recognize that,” UMC copresident Jason Wang (王石) told investors at an online conference in Hsinchu. “So we expect the demand momentum to be sustainable beyond the fourth quarter of 2021.”
UMC has clear order visibility up to the end of next year, given a persistent supply-demand imbalance and the megatrends from 5G, electric vehicles and Internet-of-Things devices, Wang said.
“Based on our observation, demand will continue to outpace supply,” Wang said. “We do not see any signs indicating a disruption” in the trend.
Wafer shipments are to rise as high as 2 percent sequentially this quarter, while the average selling price is to increase 6 percent in US dollar terms from last quarter, Wang said.
Factory utilization remains full, the company said.
UMC plans to allocate US$2.3 billion in capital expenditure to boost its capacity by 3 percent year-on-year, mainly for 28-nanometer technology.
Next year, the chipmaker plans to add 6 percent more capacity for its 12-inch mature technologies and some 8-inch technologies. The capacity expansion agreement with customers, the P6 program unveiled last quarter, would not contribute to capacity until the second quarter of 2023, Wang said.
Gross margin is expected to improve to 35 percent this quarter, following a rapid improvement to 31.3 percent last quarter from 26.5 percent in the first quarter. Last quarter’s gross margin hit the highest in about 10-and-a-half years.
“Strong demand fueled by 5G adoption and digital transformation underpinned our strong performance in the second quarter,” Wang said. “Our manufacturing facilities exceeded 100 percent utilization, while overall wafer shipments rose 3 percent quarter-on-quarter to 2.44 million 8-inch equivalents.”
Revenue last quarter rose 4.7 percent to an all-time high of NT$50.91 billion from NT$44.39 billion a year earlier and was up 8.1 percent from NT$47.1 billion the previous quarter.
The company’s 28-nanometer technology, the most advanced technology available from UMC, contributed 20 percent to its total revenue last quarter, up from 13 percent a year earlier, but flat from a quarter earlier.
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