https://www.oann.com/business/chipmaker-umc-cuts-capex/?utm_source=rss&utm_medium=rss&utm_campaign=chipmaker-umc-cuts-capex

By Sarah Wu

TAIPEI (Reuters) – Taiwanese chipmaker United Microelectronics Corp (UMC) has cut this year’s planned capital expenditure by almost a fifth, it said on Wednesday, citing weakening consumer demand without signs of recovery.

UMC, clients of which include U.S. company Qualcomm Inc and Germany’s Infineon, has benefited from a global semiconductor shortage that has kept chipmakers’ order books full over the past two years.

However, demand has slumped in recent months as soaring inflation, rising interest rates and a gloomy economic outlook have led consumers and businesses to tighten spending.

“Moving into the fourth quarter, we expect to face headwinds amid demand weakness, impacted by factors including the inflationary environment and the Ukraine war,” UMC co-president Jason Wang said in an earnings call.

The company has observed a prolonged downturn in smartphone and personal computer demand in a trend that will linger into the first half of next year, Wang said, adding that the decline is from a high base.

“There’s no tangible sign of recovery in the near term,” he said.

The company has revised 2022 capital expenditure down to $3 billion, compared with a previous plan for $3.6 billion, said finance chief Chitung Liu.

However, expansion in Singapore and Tainan in southern Taiwan are progressing as planned to meet long-term supply commitments, Wang said.

The company reported a 34.9% leap in third-quarter revenue to T$75.39 billion.

South Korea’s SK Hynix Inc also warned on Wednesday of an “unprecedented deterioration” in memory chip demand, saying it would cut investment drastically after quarterly profit tumbled by 60%.

Taiwanese rival TSMC, the world’s largest contract chipmaker, this month reported an 80% surge in third-quarter profit, its strongest growth in two years, but cut its annual investment budget by at least 10% for 2022 and struck a more cautious note than usual on future demand.

Speaking on the latest set of U.S. export controls aimed at slowing China’s progress in advanced chip manufacturing, Wang said UMC expects limited impact because the rules mainly target more advanced chips than the company produces.

However, UMC will continue to monitor developments and “take risk-management measures as necessary”, he added.

Shares in UMC closed 3.4% down on Wednesday and have fallen about 41% this year.

($1 = 32.1210 Taiwan dollars)

(Reporting by Sarah Wu; Additional reporting by Ben Blanchard; Editing by David Goodman)

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