UMC posts 83.7 percent profit increase in the first quarter

UMC posts 83.7 percent profit increase in the first quarter.
Image: UMC

The United Microelectronics Corporation (UMC) recorded a 29.7 percent increase in operating revenue and an 83.7 percent rise in net income in the first quarter. The Taiwanese chipmaker partially attributed its strong showing to the coronavirus pandemic driving sales of its consumer components.

Though the company expects global semiconductor sales to fall by 5 percent annually, it presented a positive second-quarter forecast.

UMC’s First Quarter Results

In the period ending March 31, UMC posted sales of NT$42.27 billion ($1.40 billion), up from NT$32.58 billion ($1.09 billion) in Q1 2019. The semiconductor maker also posted NT$2.20 billion ($73 million) in net income, a massive increase from the NT$1.20 billion ($40 million) it earned last year.

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UMC stated it maintained 93 percent production capacity utilization through the first quarter despite the onset of COVID-19.

The company ascribed its robust first-quarter sales to increased demand for its 8-inch equivalent wafers, which are used to make commercial and consumer device displays. The firm noted widespread remote work orders drove purchases of its ICs in the last period.

However, the chipmaker pledged to prioritize the manufacture of medical-related components to ensure hospitals and care centers have the equipment they need amidst the global health crisis.

UMC’s Positive Q2 2020 Forecast

The Taipei Times reports UMC expects the global semiconductor market to contract by five percent this year because of COVID-19. Nevertheless, the company offered a positive forecast for the current quarter because of a predicted surge in demand for its 28 nm chips. The firm expects its computer peripheral and consumer electronics clients to replenish stock ahead of production for the holiday season.

Furthermore, UMC forecasts its 8 inch wafer output will rise by 13,000 units next quarter thanks to now-resolved foundry bottlenecks. The corporation also predicts a one to two percent uptick in overall wafer shipments.

Besides, the chipmaker believes orders for 28 nm components will push its gross margin from 19.2 percent in Q1 to 20 percent in the current quarter. UMC Co-President SC Chien said demand for those wafers is up because smartphone manufacturers are ramping up their production of mid-to-entry level 4G-enabled handsets.

Last week, market research from Strategy Analytics reported COVID-19 is depressing demand for smartphones worldwide, especially expensive 5G capable devices. However, UMC’s forecast indicates consumers are looking to upgrade their hardware in the near-term if the price is right.

Consequently, Taiwan’s second-largest semiconductor manufacturer could thrive in 2020 because of the change in traditional buyer behavior.


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