SAN JOSE, Calif. -- Amid capital spending cuts for 2008, Taiwan's United Microelectronics Corp. (UMC) posted strong Q3 results but it projects a lull in Q4.
Foundry provider UMC said third-quarter sales were NT$31.03 billion (US$952 million), representing a 23.6 percent increase from the previous quarter and a 11.4 jump from a year ago.
Net income was NT$9.23 billion (US$283 million), an 88 percent increase from the previous quarter and a 7.5 percent jump from the like period a year ago.
''Certainly the strong seasonal demand in Q3 was a main contributor,'' said UMC Chairman and CEO Jackson Hu, in a statement. ''In the meantime, we must also point out that although revenue was impressive, it did not reach historical highs due to pricing pressure in both matured 8-inch and advanced 12-inch processes. This is a clear indication that there is too much competition within our industry."
UMC's capital spending will remain at $1 billion. 2008 will be a different story for the foundry provider, Hu said.
''Capex for 2008 will be significantly reduced relative to 2007 for the following reasons: (1) We have found ways of enhancing productivity for certain critical and capital intensive equipment, (2) Our capacity expansion is mainly focused on converting capacity from older generations to more advanced processes," Hu said.
''From now on, increasing profitability will be UMC's number one business objective. However, this goal will not happen overnight. A solid beginning will be the implementation of a disciplined capex strategy,'' he said.
Meanwhile, Q3 was strong for UMC. Wafer shipments increased by 26.5 percent sequentially to 1,017 thousand 8-inch equivalent wafers in Q3 from 804 thousand wafers in Q2.
The utilization rate for the quarter was 93 percent, which was higher than the approximately 90 percent level that we expected in our previous guidance.
This compares to 76 percent in the previous quarter and 82 percent a year ago.
For Q4, UMC sees a lull. It expects wafer shipments to decrease by approximately 9 percentage points. Wafer ASPs are projected to decrease by approximately 1 percentage point. Capacity utilization rate is expected to hit approximately 85 percent.