TAIPEI, Taiwan United Microelectronics Corp. said its revenues will slip 30 percent from the first to second quarter this year, but anticipates greater outsourcing from integrated device manufacturers will help reverse its fortunes toward the end of the year.
Against a backdrop of poor demand and sagging profits, UMC said more than half of the world's leading chip makers are delaying capacity expansion projects and are rethinking R&D expenditures for advanced process technology. "Many of them intend to sell off their fabs," said UMC chairman John Hsuan. "Once they terminate their expansion on fabrication facilities, they will turn to us for manufacturing. Therefore we are extremely optimistic on the future of foundries."
A second-quarter decline for UMC would follow the first-quarter decline reported on Monday (April 30). UMC said its first-quarter sales of $718 million were 26 percent lower than the year-ago first quarter, and that its utilization rate dropped to 70 percent. The company said second-quarter utilization would hover around 50 percent. The picture was similar for its rival, Taiwan Semiconductor Manufacturing Co. Ltd., which said Monday that declining sales would slash profits by 60 percent this year.
Hsuan reiterated his view that the IC foundry industry has now hit bottom, but he was reserved about a strong recovery in the third quarter. Sales by sector weren't offering any overtly encouraging signs, even though UMC's quarterly report showed that sales of communication ICs increased to 48 percent from 40 percent in the fourth quarter. "Some segments may have lower inventory levels," Hsuan said, "but the real demand is still not that strong. Although it seems like the communication segment is recovering, the truth is that the pie is shrinking. The percentage change only shows that first quarter deceleration in the communication segment is slower."
One of the few numbers on the rise is UMC's usage of advanced process technology. Production in 0.18-micron and finer process technologies accounted for 23 percent of first-quarter revenues, up from 17 percent in the fourth quarter. The company is confident that its sub-0.18-micron processes will move into greater volume production in the third quarter. UMC also renewed its pledge to keep capital expenditures at $1.5 billion.