UMC, the world's second largest pure-play foundry service provider, posted a 59% decline in net profit to $11.5 million from the December quarter, citing non-operating losses. Revenues were almost flat at $511.4 million over the same period.

Despite the lower profits, the Hsinchu-based foundry forecast better prospects for the June quarter. "We are expecting second quarter wafer shipments to increase by more than 20% compared to the first quarter," John Hsuan, chief executive and a vice chairman, said at a conference call with investors. Hsuan said demand for PCs would represent the biggest portion of the growth, followed by consumer and communications products.

Hsuan's statement follows similar comments made by Morris Chang, chairman of Taiwan Semiconductor Manufacturing Co. Ltd., Hsinchu, Taiwan. Chang said yesterday that he expects TSMC's wafer shipments to grow more than 20% in the second quarter, boosted by all segments: consumer, communications, and PCs.

More than 80% of UMC's fabs will be used in the second quarter, compared with 67% sequentially, according to the company, adding that average selling prices would continue to remain flat.

In the wake of falling ASPs and rising supply in the foundry industry, UMC has shifted to a new strategy since late last year by building closer ties with customers to shorten time to market for their products.

"We believe that the competitive landscape for the foundry business has changed dramatically, and, since last quarter, have initiated a partnership foundry business model in which we and our partners form close relationships," Hsuan said.

"In the short term, this allows the best utilization of our resources, and in the long term we believe our profitability and growth rate will outperform other foundries."

By: DocMemory
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