Business

Sales in Taiwan’s United Microelectronics Corp (UMC), the world’s second-largest contract chip maker, fell 57 percent year-on-year in February, as the global economic recession depressed demand for technology products.

UMC sold NT$3.14 billion ($90 million) worth of products last month compared with NT$7.29 billion in February 2008, the company said yesterday. UMC announced the sales results after the Taipei stock market closed.

The company posted a NT$23.5 billion ($694 million) loss for the last quarter of 2008. It also charged off NT$21.8 billion in investment losses.

UMC’s performance is taken as a benchmark indicator of the fortune of the entire industry, which, analysts agreed, doesn’t look all that healthy.

“If the biggest player in the industry is going to post a loss, the second biggest won’t be doing too well either,” said Robyn Hsu, an analyst at Capital Investment Trust Corp.

The Hsinchu, Taiwan-based UMC had sales of NT$6.29 billion for the first two months in 2009, which was a 59.4 percent drop from the same time last year.

UMC’s bigger and more profitable rival, Taiwan Semiconductor Manufacturing Co (TSMC), said in January it expected sales in the first quarter this year to drop up to 50 percent.

However, Deutsche Bank predicted TSMC’s first-quarter sales to decline 35 percent to 38 percent thanks to a weaker Taiwan dollar and possible increasing orders after the inventory adjustment phase.

“We believe the semiconductor industry should see a bottom this quarter and the number of orders will pick up as the inventory adjustment phase is reaching an end. We expect fundamentals to improve from the second quarter led by the wireless segment,” Deutsche Bank wrote in a research note.

By comparison, UMC said its first-quarter shipments of silicon wafers, used to make chips, would fall 40 to 42 percent from the previous three months, while the average selling price will decline 3 to 5 percent.

UBS said it was too early to predict when the sales in chip making companies will hit a bottom.

(China Daily March 10, 2009)