Foundry demand sends UMC's Q1 net income to $244 million
By Faith Hung
Electronic Buyers' News
(04/28/00, 10:55:56 AM EDT)
HSINCHU, Taiwan -- United Microelectronics Corp. here said today that earnings in its first quarter rose almost eight-fold, boosted by higher product prices and stronger demand for its foundry services.
UMC, the world's No.2 contract chip maker, said net profit jumped to $244 million in line with analyst expectations, compared with $31 million last year. Sales climbed 197% to $633 million during the same period.
Between January and March, UMC's gross margin rose to 46%, according to the Hsinchu, Taiwan, company's vice chairman, John Hsuan.
"We've seen very strong growth, especially from the integrated device manufacturers [IDMs]," said UMC vice chairman John Hsuan. "I hope our gross margin will hit a record 50% in 2000."
UMC is not alone. Rival Taiwan Semiconductor Manufacturing Co. Ltd.said earlier this week that earnings surged to $331 million from $134.1 million in the first quarter a year ago.
UMC also attributed its strong growth to a consolidation effort, which absorbed four units last year to help boost efficiency and increase sales.
Worldwide demand for foundry space has been growing for several months, prompting IDMs such as Toshiba Corp. and NEC Corp. to build their own fabs, analysts said. All of UMC's production lines were fully occupied during the quarter, and a similar utilization rate is expected for the second quarter, according to Hsuan.
"There [won't] be any clouds over the foundry industry for another year," said Erich Wang, analyst with ABN AMRO Asia in Taipei. Wang has a "strong buy" recommendation on both UMC and TSMC.
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