Taiwan chipmaker UMC sees demand stabilising, with 'rush' PC, smartphone orders

Taiwan chipmaker UMC sees demand stabilising, with 'rush' PC, smartphone orders

Technology

UMC sees gradually stabilising demand in Q4

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TAIPEI (Reuters) - Taiwanese chipmaker United Microelectronics Corp (UMC) said on Wednesday it sees gradually stabilising demand in the fourth quarter with recent "rush orders" for personal computers and smartphones, but added that customers remain cautious.

The semiconductor industry has come under pressure as global economic woes dent demand for chips used in everything from tablets to cellphones and cars.

UMC's bigger Taiwanese rival TSMC (2330.TW), , the world's largest contract chipmaker, said last week the semiconductor industry could be poised for recovery, predicting healthy growth for itself next year and a drop in industry inventory levels.

In an earnings release, UMC (2303.TW) co-President Jason Wang said it expected demand to gradually stabilise in the last three months of the year.

"For the fourth quarter, with the recent rush orders from PC and smartphones, we expect demand has gradually stabilised," he said.

"However, customers still employ a cautious and conservative approach in maintaining lean inventory levels, while automotive business conditions appear challenging."

However, the company kept its guidance for capital spending this year at $3 billion, compared with $2.7 billion for last year.

The second half of the year is traditionally when Taiwanese tech firms are busiest filling orders ahead of the year-end holiday season in Western markets.

UMC, whose clients include U.S. company Qualcomm Inc (QCOM.O) and Germany's Infineon (IFXGn.DE), reported a 24.3% year-on-year drop in third-quarter revenue to T$57.1 billion ($1.76 billion), though that was up 1.4% from the previous quarter.

Wafer shipments dipped 2.3% quarter-on-quarter, while capacity utilisation edged down to 67% from 71% in the second quarter.

UMC's Taipei-listed shares have risen 20.5% so far this year, outperforming a 15.7% jump in the broader market (.TWII). They closed up 1.6% on Wednesday before the earnings announcement.