UMC reports better than expected net income in 2nd Q

The China Post staff

United Microelectronics Corp. (UMC) yesterday published its financial report for the second quarter, showing a net income of NT$18.5 billion for the second quarter, up 52.8 percent from the NT$12.16 billion posted in the first quarter.

At yesterday’s seminar briefing on the company’s second-quarter operations, UMC vice chairman John Hsuan did not make any market predictions, but said that UMC was continuously upgrading its manufacturing technologies to produce higher-end IC chips.

Hsuan attributed the phenomenal growth in the second quarter to the strong demand in the international consumer electronics and telecommunications markets. A good portion of UMC’s chips are to used for consumer electronics and telecommunications products. “The fairly strong market demand may help UMC to maintain stable operations in the following months,” he said.

UMC yesterday simultaneously announced a cooperation venture with two foreign firms, AMD and Infineon, to apply nanotechnology to IC manufacturing technologies.

UMC yesterday reported an after-tax earnings of NT$4.421 billion for the second quarter and an EPS (earnings per share) of NT$0.37 for the first six months. The figures, generally regarded as better than expected, marked a significant growth when compared to the first quarter.

The company generated revenues of NT$18.58 billion during the second quarter, up 24 percent from the previous quarter. However, the company’s revenues for the first six months totaled only NT$30.74 billion, down 20.36 percent from the same period of last year.

UMC was reported to have better prospects for the third quarter than its major rival, Taiwan Semiconductor Manufacturing Corp. (TSMC) for two major reasons. First, UMC’s foreign buyers are scattered around the world while TSMC’s are mostly from the U.S. Thus, TSMC is expected to suffer more from the declining American economy.

Second, UMC is more focused on serving the consumer electronics and telecommunications markets. While the demand in the two markets will remain fairly strong in the short term, it will help UMC maintain stable operations in the following months. TSMC, on the other hand, has a more diversified product assortment and will be benefit less from the two markets.