News & Analysis
UMC changes CEO, modifies foundry strategy
By Mark LaPedus and Peter Clarke
7/15/2003 8:30 AM EDT
UMC named Jackson Hu as CEO, replacing John Hsuan, who returns to his former post as vice chairman of the Hsinchu-based foundry company. A 25-year veteran of the chip industry, Hu joined UMC at the beginning of 2003 as the president of the New Business Development Group and head of the Design Support division.
At the same time, UMC revamped its strategy--again. The company will continue to operate as a pure foundry, but will no longer pursue its "Virtual IDM" strategy. In this strategy, UMC made the subtle shift from a pure-play foundry some time ago and recently bought shares in a number of companies, including Silicon Integrated Systems Corp. (SiS) and a subsidiary of Ali Corp. The moves have enabled UMC to install board members at those companies and influence their foundry choices.
"However, in order to ensure a diversified and sufficient customer base, UMC may choose to make investments in certain IC design companies. At the same time, UMC will take all possible measures to avoid any conflict of interest with its existing customers," according to a statement issued by the company.
"UMC plans to carefully review its investment portfolio, and divest itself of non-core investments. With regard to its investments in listed IC companies, UMC plans to gradually divest itself of these investments, in a manner that will not negatively impact their stock price or business relationship with UMC," according to the company.
UMC did not elaborate that it would divest itself from SiS and Acer Labs, but the company plans to accelerate its investment in its 300-mm manufacturing facilities. Before the end of next year, UMC expects to expand capacity at Taiwan's Fab 12A to 20,000 wafers per month, and capacity at UMCi affiliate to 10,000 wafers per month. UMCi is a joint 300-mm foundry venture between UMC, Infineon, and the Singapore government.
"In order to ensure continued leadership in the area of 12-inch wafer manufacturing, UMC will further strengthen its research and development for 90nm and below process technologies, and ensure the availability of a complete catalog of relevant IP (silicon intellectual property) for integration in its customers' leading-edge designs," according to the company.
The changes follow a period of sluggishness at UMC, the world's second largest foundry, behind Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC). On Monday, Michael McConnell, an analyst with Pacific Crest Securities Inc. in Portland, raised his estimates for TSMC in both the second and third quarter of 2003.
In contrast, McConnell lowered his estimates for rival UMC in Q3. UMC's second quarter is expected to be in line with Wall Street's forecast. It is expected to earn $0.02 a share on sales of $618.5 million in Q2, compared to $0.02 a share on sales of $514.9 million in Q1.
UMC's sales are expected to be flat-to-down 5 percent in Q3. "Wafer forecasts have remained weak in the company's consumer segment," according to a report from Pacific Crest.
