Business | Technology
Taiwan's UMC posts record quarterly net loss
Taiwan's UMC, the world's No 2 contract chipmaker, posted a record quarterly net loss on big losses in equity investments and sluggish tech demand, and forecast a grim first quarter.
- Agencies
- Published: 23:04 February 10, 2009
Taipei: Taiwan's UMC, the world's No 2 contract chipmaker, posted a record quarterly net loss on big losses in equity investments and sluggish tech demand, and forecast a grim first quarter.
Most customers of TSMC, UMC and Singapore's Chartered Semiconductor, the world's three top chip foundries, are stalling orders as consumer demand for computers, mobile phones and flat-screen televisions falters.
Analysts say TSMC is likely to avoid most of the pain later this year as it has more cash than its smaller rivals and can spend more on new, advanced technologies to cut costs, making it an early beneficiary from the next upturn.
"As to advanced technology, the gap between TSMC and UMC will get bigger and bigger, and I would only like to hold shares of the sector leader," said Tu Jin-lung, chairman of Taiwan's Grand Cathay Investment Services.
United Microelectronics Corp (UMC) posted a net loss of T$23.51 billion (Dh2.5 billion) for October-December, versus a year-earlier net profit of T$1.36 billion. In the third quarter it had reported a T$1.41 billion net loss.
The quarterly loss was far bigger than analysts' forecast for estimate T$3.31 billion, according to Reuters Estimates.
TSMC was profitable in the fourth quarter, when it generated free cash flow of T$52 billion. But profits fell by about two-thirds and TSMC could see its first loss since 1990 in the current first quarter.
On its core business, UMC swung to an operating loss of T$1.17 billion against an operating profit of T$1.33 billion a year earlier. On the non-operating side, UMC booked losses of T$12.3 billion from stock investments in the fourth quarter, versus a T$37 million profit in the third quarter.
UMC forecast tough market conditions would continue into the current quarter, with wafer shipments slumping 40-42 per cent from the December quarter, while average selling prices should drop 3-5 per cent over the same period.
UMC's capacity utilisation rate will drop to 30 per cent in the first quarter from 48 per cent in the fourth quarter. UMC said its 2009 capital spending would not exceed $400 million.
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