UMC Reports 2009 Second Quarter Results

Revenue doubled in Q2; growth expected to continue into 3Q

    TAIPEI, Taiwan, July 29 /PRNewswire-Asia-FirstCall/ --

    Second Quarter 2009 Overview (Note 1):
    -- Revenue increased 108.8% sequentially to NT$22.63 billion (US$690
    -- Gross margin of 23.8%, operating margin of 11.9%
    -- Net Income of NT$1.55 billion (US$47 million)
    -- Earnings per share of NT$0.12; Earnings per ADS of US$0.018

    Note 1: Unless otherwise stated, all financial figures discussed in this
    announcement are prepared in accordance with ROC GAAP, which differ in
    some material respects from generally accepted accounting principles in
    the United States. They are un-audited, unconsolidated, and represent
    comparisons among the three-month period ending June 30, 2009, the
    three-month period ending March 31, 2009, and the equivalent three-month
    period that ended June 30, 2008. For all 2Q09 results, New Taiwan Dollar
    (NT$) amounts have been converted into U.S. Dollars at the June 30, 2009
    exchange rate of NT$32.80 per U.S. Dollar.

United Microelectronics Corporation (NYSE: UMC) (TSE: 2303) ("UMC" or "the Company"), a leading global semiconductor foundry, today announced its unconsolidated operating results for the second quarter of 2009. Revenue increased a substantial 108.8% QoQ to NT$22.63 billion, from NT$10.84 billion in 1Q09, and decreased 10.3% YoY, from NT$25.24 billion in 2Q08. Gross profit margin was 23.8%, with net margin at 11.9%. Net income in 2Q09 was NT$1.55 billion, with earnings per ordinary share of NT$0.12.

Dr. Shih-Wei Sun, CEO of UMC said, "We experienced strong customer demand in 2Q09. Wafer shipments rose substantially to 898 thousand 8-inch equivalent wafers, while utilization rate for the quarter was up to 79%. Revenues for June have exceeded last year's figures for the same month and have returned to the levels prior to the economic crisis. We expect increased revenues for Q3, and will keep a close eye on the industry situation during the upcoming quarters and proceed accordingly."

Dr. Sun continued, "UMC has executed well on its Customer-Driven Foundry Solutions approach to provide ideal solutions that meet customers' needs. The number of new products for 65/55nm has increased as anticipated, with revenue from this technology segment growing significantly from Q1 to Q2 by approximately 120%. This will help contribute to our future revenue and market share for advanced process nodes. Furthermore, numerous customers have already adopted UMC's independently developed 40nm high performance logic process. This volume production process incorporates many advanced technologies such as SiGe, Laser Anneal and Ultra Low-K. In addition, yield optimization for ICs designed using our 45/40nm Low Power process are progressing smoothly.

For more advanced 28nm HK/MG technology development, UMC will mainly adopt the Gate-Last technology, which meets our customers' needs for both high performance and low power technologies at advanced nodes. To help sustain this growth in advanced process demand, we have increased our CAPEX spending in 2009 to US$500 million. This amount will mainly be used to expand 65/55nm, 45/40nm and 28nm production capacity and to acquire the most advanced R&D equipment."

"Throughout the past year, despite the challenges brought by the global economic crisis, UMC successfully persevered," said Dr. Sun. "UMC's management team and employees worked together through this period of economic adjustment, demonstrating commendable teamwork and execution to facilitate the company's smooth reorganization and human resource consolidation. This effort resulted in significant improvements to our operating efficiency and cost structure. Looking ahead, UMC will continue to improve our utilization rate and revenues while implementing cost-control measures at the same time. We will also exercise timely CAPEX spending, aggressively invest in advanced R&D and support customers' capacity needs in order to pursue stable, long-term growth, increase profitability, and maximize return on equity."

    Summary of Operating Results

    Operating Results
    (Amount: NT$                                   QoQ%                YoY%
     million)                2Q09       1Q09      change      2Q08    change

    Revenue                 22,628     10,838      108.8    25,238     (10.3)
    Gross Profit (Loss)      5,381     (4,335)        --     5,817      (7.5)
    Operating Expenses      (2,685)    (2,982)     (10.0)   (3,454)    (22.3)
    Operating Income
     (Loss)                  2,696     (7,317)        --     2,363      14.1
    Non-op. Income
     (Expenses)               (901)      (843)      (6.9)       98        --
    Net Income (Loss)        1,547     (8,160)        --     2,397     (35.5)
    EPS  (NT$ per share)      0.12      (0.64)        --      0.19        --
         (US$ per ADS)       0.018     (0.098)        --     0.029        --

Revenue increased 108.8% QoQ to NT$22.63 billion, from NT$10.84 billion in 1Q09, and decreased 10.3% YoY, from NT$25.24 billion in 2Q08. Gross profit was NT$5.38 billion, or 23.8% of revenue, compared to a gross loss of NT$4.34 billion, or 40% of 1Q09 revenue. Operating income for the quarter was NT$2.70 billion, or 11.9% of revenue, compared to an operating loss of NT$7.32 billion, or 67.5% of 1Q09 revenue. Higher wafer shipments, lower inventory cost associated with the adoption of ROC SFAS No. 10 in 1Q09 and activities on cost control were the main reasons for the increase in gross profit and operating income. Net income in 2Q09 was NT$1.55 billion, compared to a net loss of NT$8.16 billion in 1Q09.

Earnings per ordinary share for the quarter was NT$0.12. Earnings per ADS was US$0.018. One ADS represents five Taiwan-listed ordinary shares. The basic weighted average number of outstanding shares in 2Q09 was 12,671,692,578, compared with 12,767,114,132 shares in 1Q09 and 13,171,692,578 shares in 2Q08. The diluted weighted average number of outstanding shares was 12,677,712,645 in 2Q09, compared with 12,767,114,132 shares in 1Q09 and 13,178,374,070 shares in 2Q08. The fully diluted share count on June 30, 2009 was 13,865,780 thousand. On June 30, 2009, UMC held 300,000 thousand treasury shares acquired from the 13th share buy-back program.

    Detailed Financials Section

    COGS & Expenses
                                                    QoQ%                  YoY%
        (Amount:  NT$  million)            2Q09            1Q09            change          2Q08          change

        Revenue                                      22,628        10,838          108.8          25,238        (10.3)
        CoGS                                          (17,247)    (15,173)          13.7        (19,421)      (11.2)
            Depreciation                        (8,861)      (6,973)          27.1          (7,510)        18.0
            Other  Mfg.  Costs                (8,386)      (8,200)            2.3        (11,911)      (29.6)
        Gross  Profit                              5,381        (4,335)              --            5,817          (7.5)
        Gross  Margin  (%)                      23.8%        (40.0%)              --            23.0%              --
        Total  Operating  Exp.            (2,685)      (2,982)        (10.0)        (3,454)      (22.3)
            G&A                                              (454)          (529)        (14.2)            (744)      (39.0)
            Sales  &  Marketing                  (376)          (632)        (40.5)            (620)      (39.4)
            R&D                                          (1,855)      (1,821)            1.9          (2,090)      (11.2)
        Operating  Income                      2,696        (7,317)              --            2,363          14.1
        Operating  Margin  (%)              11.9%        (67.5%)              --              9.4%              --


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