Chipmaker United Microelectronics (UMC) said its Capex will be $3 billion in 2023 despite facing soft demand and a weak outlook.
UMC did not reveal more details about cost controls. UMC reported revenue of NT$67.84 billion ($2.21 billion), net income of $621 million, gross margin of 42.9 percent and operating margin of 34.8 percent in 2021.
First Quarter 2023 Outlook & Guidance
Wafer Shipments: To decrease in the high teens % range
ASP in USD: To remain flat
Gross Profit Margin: Will be in the mid-30% range
Capacity Utilization: approximately 70%
2023 CAPEX: US$3.0 billion
“Given the soft global economic outlook for 2023, we expect the current challenging environment to persist through the first quarter as customers’ days of inventory are still higher than normal while order visibility remains low,” UMC Co-President Jason Wang told an earnings call.
“To manage this period of weakness, the company is implementing strict cost control measures and deferring certain capital expenditures where possible.”
UMC’s 2022 capital spending was $2.7 billion, less than the $3 billion previously planned. UMC’s Capex for 2023 will be $3 billion, said finance chief Chitung Liu. New capacity would come online in the third quarter in the southern Taiwanese city of Tainan.
The automotive industry, which was hit hard by global chip shortages, was expected to be a key growth catalyst this year and beyond, given the move to electric vehicles, Wang added.
UMC reported 14.8 percent rise in fourth-quarter revenue to T$67.84 billion ($2.24 billion), though that was 10 percent down compared to the previous quarter with wafer shipments falling 14.8 percent quarter on quarter.
Taiwanese rival TSMC, the world’s largest contract chipmaker, last week reported a 78 percent surge in fourth-quarter profit, but warned that first-quarter revenue would drop as much as 5 percent and it would slash annual investment.
Taiwan-based UMC, whose clients include Qualcomm and Infineon, has benefited from a semiconductor shortage that has kept chipmaker order books full in the past two years.
Demand has slumped in recent months as inflation, rising interest rates and a gloomy world economic outlook have led consumers and businesses to tighten spending.