UMC's Q2 earnings quadruple
Jul 29, 2004
Chief executive Jackson Hu said the chipmaker earned NT$12.7 billion last quarter and shipments this quarter will increase by as much as 16 percent
United Microelectronics Corp (UMC), the world's No 2 contract chipmaker, said yesterday that its quarterly earnings more than quadrupled on improved chip prices and it expected robust demand to fuel further growth, primarily from communications applications such as mobile phones. "Demand will still be growing as a whole," UMC chief executive Jackson Hu said at an investors' conference in Taipei. "The demand will be stronger in the third quarter compared to that of the second quarter," he said.
Along with the growing demand, Hu said that UMC's wafer shipments will increase by as much as 16 percent in the current quarter from 710,000 wafers at the quarterly rate. Factory facilities will be fully utilized, he added.
UMC's second-quarter earnings soared to NT$12.7 billion (US$373 million), or NT$0.83 a share in the second quarter, compared to NT$2.69 billion, or NT$0.17 per share, a year ago. Some investors cast doubt on the local technology sector's earnings outlook for the second half of the year, but Hu said that UMC's sales and earnings will improve further because of rising shipments and higher average chip prices during the third quarter. There might be a chance to see further growth in the final quarter, he added.
Average selling prices will rise by an additional 3 percent to 4 percent, Hu said, which is slower growth compared to the 6 percent growth in the second quarter versus first quarter.
UMC, which supplies chips to Texas Instruments and Qualcomm, had 44 percent of its sales of NT$29.18 billion from chips used in communications gad-gets in the second quarter. In the first half of the year, UMC's earnings jumped more than fivefold to NT$19.59 billion, or NT$1.28 per share, versus NT$3.09 billion, or NT$0.2 a share, a year earlier.
"But UMC's upbeat prospects do not allay the worries about a slump," said Alfred Ying, an analyst with BNP Paribas Peregrine in Taipei. "We are maintaining our projection that the foundry business will hit the peak in the third quarter before dipping into a downswing in the final quarter," Ying said. Chartered Semiconductor Manu-facturing Ltd's forecast of a flat third quarter may serve as a precursor to semiconductor slowdown, Ying said.
Merrill Lynch lowered its position on UMC and bigger rival Taiwan Semiconductor Manufacturing Co (TSMC) to "neutral" from "buy" earlier this month on concern over ballooning inventories would slow order placement. "The question now is when the demand will come up. That's [what] everybody is hoping," Dan Heyler, head of Merrill Lynch's Asia Pacific Semiconductors Research, said yesterday in Taipei.
TSMC chairman Morris Chang is expected to give his guidance for the company's third quarter operations in the quarterly investors' meeting today.
Source: Taipei Times