UMC Reports 2005 Second Quarter Results: Wafer Shipment Growth Rebounds; Trend Expected to Continue

UMC narrowed its cash-based 2005 CAPEX plan to US$1 billion. By the end of the second quarter, UMC's year-to-date CAPEX totaled US$332 million.
 UMC Capital Expenditure by Year
    (US$ billion)        2004     2003   2002    2001    2000    1999
        CAPEX           $1.53    $0.37   $0.8    $1.1    $2.8    $1.9

 2005 CAPEX Plan
                          8" fab    12" fab    12" R&D        Total
 UMC                         5%       83%         12%     US$1 billion
 UMCJ                      100%        -           -     US$34 million

Long-term Investments(6)
        Consolidated Long-term Investments as of June 30, 2005

                     As of End of 2Q05         As of End of 1Q05
(Amount: NT$       Book         Fair         Book         Fair
 million)          value    %   value    %   value    %   value    %
Foundry Industry  12,994   31  13,214   19  35,673   56  32,584   38
 Investments      12,102   29  35,163   50  11,138   18  33,454   39
Other Investments 17,111   40  21,394   31  16,854   26  19,884   23
Total             42,207  100  69,771  100  63,665  100  85,922  100

As of June 30, 2005, the total book value of long-term investments held by UMC was NT$42.21 billion, and the estimated fair value of long-term investments was NT$69.77 billion. The decrease in book value and fair value of foundry industry investments was mainly due to the removal of UMCi as an investment after the transfer of UMCi's business, operations and assets to UMC's Singapore branch in 2Q05. The increase in other investments is due to an increase in the share price of several investments.

Recent Developments / Announcements
Jun. 20, 2005   2005 UMC Fabricates Record-Setting Voltage-Controlled
                 Oscillator Using MOS Technology
Jun. 16, 2005   2005 UMC's R&D Team Extends Traditional Nitrided Gate-
                 oxide to beyond the 65nm node
Jun. 13, 2005   2005 UMC Shareholders Approve NT$1.1 Dividend for
                 Fiscal Year 2004 at Annual Shareholders Meeting
Jun. 03, 2005   2005 UMC Receives Top Award for Sustainable
                 Development from the ROC Government's Executive Yuan
Jun. 01, 2005   2005 UMC Celebrates 25th Anniversary
May  24, 2005   2005 ARM ARTISAN Low-Power IP For 130-Nanometer
                 Process Selected by UMC
May  19, 2005   2005 UMC Marks 25th Anniversary with Launch of Major
                 Community Support Programs
Apr. 27, 2005   2005 UMC 1Q 2005 Financial Results

 Please visit UMC's website
        for further details regarding the above announcements.

Third Quarter of 2005 Outlook & Guidance

Quarter-over-quarter Guidance:

-- Wafer shipments: to increase by mid-teen % points

-- Wafer ASP (in US$): to increase by low single digit % points

-- Capacity utilization rate: approximately 75%

-- Profitability: operating profit margins to be 0% to -3%

-- Percentage of 0.18um & below revenues: to reach 60% while 90nm is expected to be approximately 15%

-- The communication segment is expected to be the strongest followed by the consumer and computer segments

-- 2005 CAPEX budget: US$1bn
Conference Call / Webcast Announcement

Wednesday, July 27, 2005

Time: 8:00 PM (Taipei) / 8:00 AM (New York) / 1:00 PM (London)

Dial-in numbers and Access Codes:
Asia/Europe:        +1-617-614-2706
North America:      866-761-0748
Access Code:        UMCCall

  A live webcast and replay of the 2Q05 results announcement will be
   available at under the "Investor Relations \ Investor
                           Events" section.

About UMC

UMC (NYSE: UMC, TSE: 2303) is a leading global semiconductor foundry that manufactures advanced process ICs for applications spanning every major sector of the semiconductor industry. UMC delivers cutting-edge foundry technologies that enable sophisticated system-on-chip (SoC) designs, including 90nm copper, 0.13um copper, and mixed signal/RFCMOS. UMC is also a leader in 300mm manufacturing; Fab 12A in Taiwan and Singapore-based Fab 12i are both in volume production for a variety of customer products. UMC employs approximately 10,500 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at

(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 unaudited, unconsolidated, and represent comparisons among the three-month period ending June 30, 2005, the three-month period ending March 31, 2005, and the equivalent three-month period that ended June 30, 2004. For all 2Q05 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. dollars at the exchange rate of NT$31.59 to one U.S. dollar.

(2) Days Sales Outstanding = 365/((Operating revenues for the three-month period end *4)/((Beginning NR&AR balance, net + Ending NR&AR balance, net)/2))

Average Inventory Turnover = 365/((COGS for the three-month period end *4)/((Beginning Inventory balance, net + Ending Inventory balance, net)/2))

(3) Revenue in this section represents net wafer sales. All revenue breakdown tables exclude JV's and subsidiaries.

(4) Estimated capacity numbers are based on calculated maximum output rather than designed capacity. The actual capacity numbers may differ depending upon equipment delivery schedules, pace of migration to more advanced process technologies, and other factors affecting production ramp-up.

(5) Quarterly utilization rate = Quarterly wafer out / Estimated quarterly capacity

(6) The long-term investment information disclosed is UMC Group consolidated data, which includes UMC, Hsun Chieh Investment Corp., Fortune Venture Capital Corp. and UMC Capital Corp. For publicly quoted investments, fair value is calculated by multiplying the average daily closing price of the last month of the accounting period (June of 2005) with the number of shares owned by the UMC Group as of June 30, 2005. Otherwise, book value or underlying equity net value of investments is taken as recorded on the balance sheet at the end of the accounting period (June 30, 2005) and is used as the fair value.

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