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.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS