UMC says chip outlook bright as Q3 profits soar

TAIPEI, Taiwan — A strong recovery in demand for semiconductors helped lift United Microelectronics Corp.’s (UMC) third-quarter net income by 195 percent, the contract chip maker said Wednesday. The announcement comes as the semiconductor manufacturing industry shows signs of climbing out of a downturn that has lasted for more than two years.

UMC said third-quarter revenue hit NT$21.5 billion ($635.3 million as of Sept. 30, the last day of the period reported), up 12.5 percent from NT$19.2 billion during the same period last year.

Net income soared during the same period, rising to NT$4.2 billion, UMC said. That represents an increase of 195.2 percent from the third quarter of 2002, when the Hsinchu, Taiwan, company reported net income of NT$1.4 billion.

Alongside rising demand for chips, UMC’s third-quarter income received a boost from investments that the company disposed of during the period. That income included NT$1.25 billion received from the sale of shares in integrated-circuit designer MediaTek Inc. and NT$95 million gained from a partially converted exchangeable bond for shares in TFT-LCD (thin film transistor liquid crystal display) panel maker AU Optronics Corp., UMC said.

Looking ahead, UMC expects demand for chips to continue growing. The company said shipments will grow by 10 percent during the fourth quarter, driving the company’s capacity utilization rate from 84 percent during the third quarter to more than 90 percent.

UMC’s third-quarter results underscore a growing recovery in demand for semiconductors.

On Tuesday, UMC rival Taiwan Semiconductor Manufacturing Ltd. (TSMC) reported record third-quarter revenue and a 380 percent increase in profits. The soaring profits recorded by UMC and TSMC underscore earlier statements by industry executives that the semiconductor industry is recovering from a two-year slump in demand.

This increase in demand is partly being driven by a surge in orders for computing hardware, which have reached levels not been seen in years.

Last week, Market Intelligence Center (MIC), a government-backed market research firm in Taipei, said hardware orders received by Taiwanese manufacturers for a range of products, including notebooks and servers, had hit record levels, driven higher by an improved economic climate and a gradual recovery in corporate IT spending. Desktop PC orders had also risen sharply, matching levels not seen since 2001, MIC said.