A look inside one of UMC fabs
Taiwan chipmaker UMC’s 2023 outlook trimmed on L-shaped rebound
Rapid-growing tech trends like AI and electric cars to help lift chip demand.
United Microelectronics Corp. (UMC) has warned of "uncertain” demand in the third quarter, prompting analysts at Wedbush to cut their revenue forecasts for this year on expectation of an L-shaped recovery.
The Taiwan-based firm, among the largest contract chipmakers globally, said in its latest guidance last week that wafer shipments could decline by 3-4% in the third quarter from the previous three months amid a prolonged inventory correction in the supply chain.
UMC co-president Jason Wang had said they are seeing “spots of limited customers” although end-market sentiment will likely remain weak overall and clients to stay cautious in building up their inventories.
Following the “disappointing outlook,” Wedbush revised its revenue forecast down to NT$55.87b (US$1.85b) for the third quarter from NT$61.65b previously, according to a note by its analyst Matt Bryson dated 26 July.
Expectations for full-year revenues have also been slashed by 3.2% to NT$228.46b for 2023 compared to initial estimates. Wedbush also cut its 2024 revenue expectations by less than NT$1b to NT$280b.
“While our forward expectations adjust downwards modestly, we continue to believe that our intermediate term outlook (e.g., margins in the mid-30s and a return to average utilization rates of 80%+) remain eminently reasonable,” it said.
Wedbush retained its “outperform” rating for the Taipei-listed stock as new production will be supported by existing long-term agreements and the eventual recovery of demand in semiconductor foundry.
Technology trends like artificial intelligence, electric vehicles, and IoT are also expected to drive demand across devices further.
UMC saw its revenues fall 22% year on year to NT$56.3b in the second quarter, although the latest figure was still 3.8% higher when compared to the first three months of the year.
While wafer shipments remained flat and utilisation rate stood at 71% last quarter, UMC still kept its cash-based capital expenditure budget for 2023 at US$3b versus the US$2.7b spent last year.
