United Microelectronics (UMC) expects its wafer shipments and ASPs to stay flat sequentially in the second quarter of 2017, when the foundry chipmaker's capacity utilization rate will fall to 90-93% from 96% in the first quarter. Gross margin will climb to about 25% from about 20% in the prior quarter, however.
"Current forecasts reflect a pick-up in mature 12-inch wafer business due to higher demand from wireless, IoT and consumer electronics. However, the increased demand in legacy 300mm wafer shipments will be offset by a decline in 28nm business," said UMC CEO Po-Wen Yen.
"As we transition from 28nm to 14nm manufacturing, we expect our 14nm shipments to sequentially increase in the second quarter of 2017," Yen indicated.
UMC reported consolidated revenues for the first quarter of 2017 increased 8.8% on year but decreased 2.3% sequentially to NT$37.42 billion (US$1.2 billion). Gross margin for the quarter came to 19.9% compared with 22.9% in the prior quarter and 14.6% during the same period in 2016.
Sales generated from 28nm and below process technologies accounted for 17% of UMC's total wafer sales in the first quarter of 2017, compared with 22% in the prior quarter and 8% a year earlier, the foundry said. Sales of 28nm chips fell on lower shipments for communications chips, the foundry added.
Nevertheless, UMC's overall capacity utilization rate grew to 96% in the first quarter of 2017 from 94% in the previous quarter. "During the quarter, the utilization rates in 8-inch fabs as well as 12-inch advanced nodes approached near full capacity, driven by the strength in consumer and communication segments," Yen said.
UMC generated net profits of NT$2.29 billion in the first quarter of 2017, down 10.3% sequentially but up significantly from the NT$210 million posted for the same quarter a year ago. EPS for the quarter came to NT$0.19.
In addition, UMC's transfer of 28nm process technology to subsidiary United Semiconductor (Xiamen) has been approved by Taiwan's government authorities. "This licensing approval will help Fab 12X to ramp its manufacturing scale, expand its process technology offerings and complements UMC's overall growth strategy," Yen indicated.
