SAN JOSE, Calif. – United Microelectronics Corp. reported flat sales and declining profits for its second quarter and forecasted revenue will fall 10-12 percent in the coming quarter. The company expects monthly declines over the next three months, but did not forecast the fourth quarter.
UMC expects capacity usage to decline to less than 75 percent amid global economic conditions that are depressing demand. In the second quarter fab utilization slipped to 87 percent from 90 percent in the prior quarter and 100 percent a year ago.
"European and U.S. debt and emerging market inflation have led to unfavorable business conditions leading customers to take a conservative outlook," said Shih-Wei Sun, chief executive of UMC. "We anticipate UMC's business performance may reflect these weak conditions into the third quarter," he added.
Sun also pointed to customers reducing inventory after overstocking in the aftermath of the Japan earthquake. Communications, including mobile chips, are especially impacted by the slowdown, he said.
UMC reported sales of NT$28.150 billion nearly flat with the prior quarter and below NT$29.745 billion a year ago. Profits slipped from $4.483 billion in the prior quarter down to NT$3.192.
The company shipped 1.145 million eight-inch equivalent wafers in its second quarter. That's up slightly from 1.120 million in the prior quarter but down from 1.156 a year ago.
The company maintains plans to spend US$1.8 billion in capital spending in 2011. The spending will support the ramp of its 40nm process that is expected to contribute to 10 percent or revenues in 2011.
UMC also expects to start making its first 28nm products in the fall. UMC will use a single process at 28nm process, converging separate low power and high performance processes at 40nm.
The company will develop an enhanced version of a 28nm process and is working with partners to assemble a suite of 28nm IP blocks. "90nm is our weak node now [because] many customers are jumping from 130nm to 65nm," said Sun.
United Microelectronics Corp., UMC, Capacity, 28nm, 40nm, Fabs UMC predicts declines in revenues, fab use
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