SAN JOSE, Calif. - Taiwan foundry vendor United Microelectronics Corp. (UMC) Wednesday (April 27) reported first quarter sales that fell short of analysts' expectations and tempered its outlook for the second quarter.
UMC said revenue was NT$28.12 billion ($974.19 million) in the first quarter, a 10.2 percent quarter-over-quarter decrease and a 5.3 percent year-over-year increase.
Net income was NT$4.48 billion ($155.2 million) in the first quarter, down 30.2 percent from the previous quarter but up 28.7 percent from the like period a year ago.
However, UMC insists that it beat analysts' estimates. ''We were in line with our (sales) guidance,'' according to a UMC spokesman. ''We beat Reuters estimates by over 14 percent'' in terms of profit.
In a statement, Shih-Wei Sun, CEO of UMC, said: "For Q2, we have tempered our expectations for revenue and profit, since more time is needed to accurately assess worldwide semiconductor demand due to Japan's March 11th earthquake and its impact on the global supply chain.''
UMC's supply of raw materials and equipment remained secure. "The next several quarters involve several uncertainties, such as the schedule for supply chain recovery, inflation in emerging markets, European sovereign debt, and exit of the U.S. quantitative easing program,'' he said. ''These factors may potentially impact the global economy as well as UMC's performance in the second half of the year.''
There are other challenges for UMC. ''While UMC has long been the second-largest foundry in the world by revenue, the company sits straight in the crosshairs of GlobalFoundries, which expects its sales revenue to rise at least 14 percent to more than US$4 billion (NT$117.28 billion) this year. If so, GlobalFoundries will overtake UMC to take the spot below TSMC on the rankings,'' according to a report from the US-Taiwan Business Council.
UMC is moving forward with capacity expansion for advanced technologies. ''28-nm R&D collaboration with customers is also progressing smoothly and is scheduled for pilot production by mid-year,'' he added.
For Q1, meanwhile, revenue from 65-nm and below remained 35 percent of total revenue, with 40-nm accounting for 6 percent of UMC's Q1 sales. Revenue from 40-nm accounted for 5 percent of UMC's sales in the previous quarter and 1 percent a year ago.
Wafer shipments decreased 1.1 percent sequentially to 1.120 million in 1Q11, compared to 1.132 million 8-inch equivalent wafers shipped in 4Q10. As wafer capacity increased in Q1, overall utilization rate for the quarter was 90 percent, compared to 94 percent in the previous quarter and 88 percent a year ago.
Capacity during the first quarter was 1.259 million 8-inch equivalent wafers. The increase in total capacity is mainly due to advanced capacity expansion at 300-mm fabs. The estimated installed capacity in 2Q11 will increase to 1.330 million 8-inch equivalent wafers.
The capital expenditure budget remains unchanged at $1.8 billion. For Q2, wafer shipments and ASPs are expected to be flat. Capacity utilization is expected to be in the mid-80 percent range.
Rival Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) is expected to report its results this week. TSMC's first-quarter results will mostly be ''in line, though potential supply/demand concerns to govern outlook,'' said Steven Pelayo, an analyst with HSBC, in a report.
TSMC's Q1 sales are projected to fall 4.3 percent quarter-over-quarter. ''We expect few surprises as a richer mix/higher ASPs likely mitigate increased pressures from higher depreciation and currency,'' he said. ''For 2Q11, we expect management to moderate its growth expectations in light of potential supply (earthquake) and demand (broader macro) pressures. Our latest checks suggest order patterns have been volatile with some customers reducing forecasts, while others rush to secure capacity in case of supply constraints.''
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