Page last updated at 11:46 GMT, Tuesday, 10 February 2009

Big loss at Taiwanese chipmaker

computer chip
Chipmakers are struggling amid falling consumer demand for PCs and mobiles

World number two chipmaker United Microelectronics Corp (UMC) has reported a big quarterly net loss as demand for chips continues to decrease.

Between October and December, UMC made a net loss of 23.51bn Taiwanese dollars ($694m; 467.4m) - a year earlier it had made a net profit of T$1.36bn.

Meanwhile, the Japanese unit of flash memory maker Spansion Inc, has filed for bankruptcy protection.

The economic slowdown has severely dented demand for PCs and mobiles.

Several customers of the top three chip foundries - TSMC, UMC and Chartered Semiconductor - have delayed orders as consumers tighten their belts and become increasingly reluctant to spend on expensive technology.

Gloomy figures

UMC's quarterly loss was much bigger than the T$3.31bn analysts surveyed by the Reuters news agency were expecting.

Operating losses were T$1.17bn, compared with an operating profit of $1.33bn a year earlier.

The firm also made a T$12.3bn loss on stock investments in the quarter.

UMC also issued a downbeat forecast about the current quarter and said it expected the difficult market conditions to continue.

It predicted wafer shipments would plummet 40-42% from the December quarter, and it sees average selling prices declining 3-5% over the same period.

UMC's chief executive Sun Shih-wei offered a glimmer of hope, saying that there was a chance the first quarter would be the bottom, but he conceded he did not know whether demand would pick up.

Meanwhile, the gloom within the technology sector continued to spread with news that Spansion Japan, the Japanese unit of flash memory maker Spansion Inc, had filed for bankruptcy protection with $810m ($574m) of liabilities.

As with UMC, weak consumer demand has hurt the company, but another problem has been the declining popularity of the NOR-type flash memory it makes.

NOR is used in older, more basic mobile phones and is ceding ground to the NAND-type flash memory which allows users to store music and download videos.

Spansion Inc, the world's third-biggest flash memory maker, said Spansion Japan would continue operation during the restructuring period and had sufficient cash reserves to meet its short-term needs.

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