Taiwan's United Microelectronics Corp. (UMC) moved back into the black in the second quarter and

raised its capital spending from $400 million to $500 million in 2009.
Revenue increased 108.8 percent quarter-over-quarter to NT$22.63 billion ($687.3 million). But year

-over-year, UMC's sales fell 10.3 percent.

Net income in the quarter was NT$1.55 billion ($47.1 million), compared to a net loss of NT$8.16

billion ($247.8 million) in the first quarter and a profit of NT$2.397 billion ($72.6 million) a year ago.

Wafer shipments increased 134 percent sequentially to 898 thousand in the second quarter,

compared to 384 thousand 8-inch equivalent wafers shipped in the first quarter. Overall utilization rate

for the quarter was 79 percent, compared to 30 percent in the previous quarter and 85 percent a

year ago.

Revenue from 65-nm business increased to 12 percent of total revenue, compared to 11 percent in

1Q09.

For Q3, wafer shipments are expected to increase by approximately 8-10 percent, wafer ASPs will rise

by approximately 5 percent and capacity utilization rates will hit approximately 85 percent.

UMC's Q3 profitability will be a ''modest increase'' from the previous quarter. The computer segment is

expected to be the strongest, followed by the consumer and communication segments.

Shih-Wei Sun, CEO of UMC, painted a mixed picture. "We experienced strong customer demand in

2Q09. We expect increased revenues for Q3, and will keep a close eye on the industry situation

during the upcoming quarters and proceed accordingly," he said in a statement.

''Furthermore, numerous customers have already adopted UMC's independently developed 40-nm high

performance logic process,'' he said. ''To help sustain this growth in advanced process demand, we

have increased our capex spending in 2009 to $500 million. This amount will mainly be used to expand

65/55-nm, 45/40-nm and 28-nm production capacity and to acquire the most advanced R&D

equipment."

''UMC raising its capex this morning for CY09 from less than $400 million to $500 million should not

come as a surprise,'' said C.J. Muse, an analyst at Barclays Capital, in a report.

''What we think is somewhat new news, and what jives with our recent checks, is that foundry

spending will be sustainable through 4Q. On its call today, UMC suggested they would spend above

historical avg of 20 percent of revenues on capex in an effort to play catch up. So we take UMC's

commentary as supporting our thesis that foundry spending will be sustainable into 4Q suggesting only

a modest pickup from memory will sustain solid sequential order growth into 4Q,'' he added.

By: DocMemory
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