Replies to post #9943 on Zeev's Turnips Patch-No Politics (ZEEV)

[AKvetch]

Cholan, TSM was not the "last nail", as you put it. UMC is also cutting back on capital equipment purchases. AK
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UMC trims capital spend despite good times' return
By Semiconductor Business News
Jul 30, 2002 (2:30 AM)

URL: http://www.siliconstrategies.com/story/OEG20020730S0001

TAIPEI, Taiwan -- Foundry manufacturer United Microelectronics Corp. (UMC) grew its sales revenue and net profits in the second quarter of 2002 but the company still took the opportunity to announce a trimming of its plans for 2002 capital expenditure from US$1.6 billion forecast in the first quarter to $1.3 billion.

UMC's sales revenue for the second quarter was $554 million up 52.8% from the first quarter of 2002 and up 23.9% from the $362 million of the same quarter in the previous year. UMC made a net profit of $133 million in the second quarter of 2002. This compared with $6 million profit in the previous quarter and a loss of $55 million in the second quarter of 2001.

“We are extremely pleased with our results for the quarter, especially the significant quarter-over-quarter growth in sales that topped our forecast. Clearly, even more important is our return to operating profitability,” said UMC vice chairman and chief executive officer John Hsuan, in a statement.

Hsaun put the booming second quarter sales down to strong demand from the consumer and communications sectors and the fact that the adoption of more advanced technology was having a beneficial effect on average selling prices.

However, UMC still sees only gradual recovery in place, indeed more gradual than previously expected, and so it plans for a cut in 2002 capital expenditure.

The company said that within the revised plan it remains committed to spend in full the amounts originally budgeted for Fab12A capacity expansion and 130-nanometer copper modules. On the other hand, UMC will reduce the amount allocated to increase eight-inch wafer capacity for Fab 8F.

Capacity for the second quarter was 649,000 eight-inch equivalent wafers. UMC currently estimates that in the third quarter of 2002 capacity will reduce to 641,000 eight-inch equivalent wafers, mainly due to a capacity adjustment across fabs. Fab 8C, Fab 8D and Fab 8E equipment will be reshuffled to optimize each fab's productivity, and Fab 8D will be transformed into a full copper production line.

Copyright 2001 © CMP Media Inc.

[sma]

Not sure about sox at 280, but I think we have a retrace coming in the indices, dollar and gold acting like there is so I won't be surprised if tomorrow is the day. If there is one tomorrow then sox will probably lead the selloff because of it underperforming recently.

[mlsoft]

cholan...

I am not sure what you mean by TSM being "the last nail" or the time frame you are using. If, however, you mean that TSM's announcement was the last of the bad news for the sector or that the equipment stocks have found a bottom here, I sincerely doubt both ideas. Both UMC's warning and capex cut and KLAC's warning both have come since. I believe that over the next 6 months or longer there will be a fair amount more bad news than good out of the equipment stocks, with warnings, lowered estimates, more layoffs (time to cut loose some of the bloated management cadre), more large chargeoffs, and other assorted ills being common - some of the same will be common in the chip sector also. I look for some attrition (some of these companies do not have the reserves to survive a long slow period) and probably a few mergers and acquisitions.

This sector has been among the last to fall, but it is not done yet, in my opinion, and the fundamentals are beginning to deteriorate again.

mlsoft

[Patrick Bateman]

Why are you wishing me luck (It wasn't my post you were responding to)?

Thanks at any rate - I can use all i can get

Good luck to you as well

Virtually Yours,

Pat Bateman

[James Bondage]

Still sticking to my SOX 280 call. Sell volume on the chips today will be higher than the buying volume over the last couple days, which means this is not a one day correction.