Taiwan's UMC turns to net loss in Q3 on price erosion, investment losses

Wed. October 29, 2008; Posted: 03:44 AM

TAIPEI, Oct 29, 2008 (XFN-ASIA via COMTEX) -- UMC | Quote | Chart | News | PowerRating -- United Microelectronics Corp (2303.TW), the world's second-biggest contract chipmaker, said it turned to a loss in the third quarter to September mainly due to a lower average selling price, a drop in capacity utilization, and non-operating expenses connected to investment losses.

UMC had a parent-level net loss of 1.41 bln twd in the third quarter, compared with a profit of 2.40 bln twd in the second quarter and a profit of 9.23 bln twd a year earlier.

Sales fell to 24.75 bln twd from 25.24 bln in the second quarter and 31.03 bln in third quarter 2007.

The average selling price dropped by 1 pct from the second quarter to the third.

UMC shipped 883,000 eight-inch-equivalent wafers in the third quarter, compared with 875,000 in the preceding three months and 1.02 mln a year earlier.

Gross margin narrowed to 17.6 pct from 23.0 pct in the second quarter and 26.5 pct in third quarter 2007 as the capacity utilization rate fell to 79 pct from 85 pct and 93 pct.

Though UMC had operating income of 947 mln twd in the third quarter, non-operating charges dragged it to a net loss.

It booked 2.11 bln twd of net non-operating expenses in the third quarter against income of 120 mln in the preceding three months and income of 5.76 bln a year earlier, mainly because its investment losses widened to 2.86 bln twd from 575 mln.

Chief financial officer Liu Chi-tung said the company booked a 3.22 bln twd impairment loss and a 1.35 bln twd loss on valuation of financial assets in the third quarter.

(1 usd = 33.30 twd)

adela.lin@afxasia.com

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For full details on United Microelectronics Corporation ADS (UMC) click here. United Microelectronics Corporation ADS (UMC) has Short Term PowerRatings of 6. Details on United Microelectronics Corporation ADS (UMC) Short Term PowerRatings is available at This Link.

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