United Microelectronics Corp (UMC), the Taiwanese chipmaker, stated on Wednesday that it anticipates a gradual stabilization of demand in the fourth quarter, driven by recent “rush orders” for personal computers and smartphones. However, UMC also mentioned that its customers continue to exercise caution.

With 'rush' PC and smartphone purchases, Taiwan chipmaker UMC sees demand stabilizing

On September 16, 2022, the emblem of United Microelectronics Corporation (UMC) is on display in the lobby of the company’s facility situated in Hsinchu Science Park, Hsinchu, Taiwan.

The semiconductor industry has faced challenges due to global economic uncertainties that have led to reduced demand for chips used in various products, including tablets, cellphones, and automobiles.

UMC’s larger Taiwanese competitor, TSMC (2330.TW), which is the world’s largest contract chipmaker, indicated last week that the semiconductor industry might be on the brink of recovery. It forecasted robust growth for itself in the upcoming year and a reduction in industry inventory levels.

UMC (2303.TW) co-President Jason Wang, in an earnings statement, expressed the company’s anticipation of demand gradually steadying during the final quarter of the year.

Wang remarked, “In the fourth quarter, given the recent surge in orders for PCs and smartphones, we believe that demand has started to stabilize.”

Nevertheless, he noted that customers continue to adopt a careful and prudent strategy in maintaining minimal inventory levels, while the conditions in the automotive sector present challenges.

However, the company maintained its capital spending guidance for this year at $3 billion, which is an increase from the $2.7 billion spent the previous year.

The latter half of the year traditionally represents a busy period for Taiwanese tech companies as they work to fulfill orders in preparation for the year-end holiday season in Western markets.

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UMC, whose clients include U.S. firm Qualcomm Inc (QCOM.O) and Germany’s Infineon (IFXGn.DE), reported a 24.3% year-on-year decline in third-quarter revenue, amounting to T$57.1 billion ($1.76 billion). Nevertheless, this figure represented a 1.4% increase from the previous quarter.

Wafer shipments experienced a 2.3% decline from the previous quarter, and capacity utilization dropped from 71% in the second quarter to 67%.

UMC’s shares listed on the Taipei stock exchange have shown a year-to-date increase of 20.5%, surpassing the broader market’s 15.7% gain (.TWII). On Wednesday, they concluded the trading day with a 1.6% increase before the earnings announcement.

(Conversion rate: $1 = 32.3560 Taiwan dollars)

Reported by Ben Blanchard, with editing by Jan Harvey

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