United Microelectronics Corp (UMC, 聯電) expects its addressable market to grow by a low single-digit percentage this year, lower than the overall foundry industry’s 15 percent expansion and the global semiconductor industry’s 10 percent growth, the contract chipmaker said yesterday after reporting the worst profit in four-and-a-half years in the fourth quarter of last year.
Growth would be fueled by demand for artificial intelligence (AI) servers, a moderate recovery in consumer electronics and an increase in semiconductor content, UMC said.
“UMC’s goal is to outgrow our addressable market while maintaining our structural profitability,” UMC copresident Jason Wang (王石) told an online earnings conference.
Photo: Grace Hung, Taipei Times
For the current quarter, UMC expects wafer shipments to be flat from last quarter.
“The first quarter is better than traditional seasonality,” Wang said. “It could be triggered by either the [US] tariffs or the subsidies [on consumption by Beijing]. We are hoping that the second quarter can sustain that [momentum], but at this point, due to limited visibility, we cannot give you a second-quarter guidance.”
Gross margin is expected to drop to below 30 percent but above 25 percent this quarter, compared with 30.4 percent last quarter, attributable to a 5 percent decline in average selling prices and higher depreciation expenses, UMC said.
That also factored in the impact of a magnitude 6.4 earthquake that hit Chiayi County yesterday.
The factory utilization rate is to be little changed versus last quarter at 70 percent, it said.
To fend off growing competition, UMC is looking to strengthen its product portfolio and boost revenue contribution from 22-nanometer and 28-nanometer chips, the most advanced chips available from UMC, to 37 or 38 percent this year, from 34 percent last year, Wang said.
UMC is also committed to collaborating with Intel Corp in developing 12-nanometer technology, Wang said.
In addition, UMC is broadening its advanced chip packaging product offerings beyond the 2.5-D interposer that is used in chip-on-wafer-on-substrate technology, Wang said.
The chipmaker would not miss out on business opportunities associated with new photonic ICs, he said.
UMC plans to allocate 38 percent less capital expenditure this year at US$1.8 billion, compared with US$2.9 billion last year.
Net profit plummeted 35.6 percent year-on-year to NT$8.5 billion (US$259.4 million) last quarter. That represented a quarterly contraction of 41.4 percent from NT$14.47 billion in the third quarter last year.
Last year as a whole, UMC’s net profit shrank 22.6 percent to NT$47.21 billion compared with NT$60.99 billion in 2023. Earnings per share fell to NT$3.8 from NT$4.93.
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