Lianhua electronics released fourth quarter earnings net profit of $94 million

Beijing on February 14th news, according to foreign media reports, UMC released the 2005 fourth quarter earnings today. The report shows that due to strong market demand for chip products, fourth quarter net profit of more than doubled in the same year, more than analysts expected.

In this quarter of December 31st, net profit of UMC is NT $3 billion 44 million (US $94 million), growth of 128.4% over NT $1 billion 330 million over the same period last year, increased 40.6% more than NT $2 billion 165 million in the previous quarter; operating profit of NT $928 million, over the same period last year, NT $2 billion 839 million decline 63.7%, a quarter operating loss of NT $560 million; net sales of NT $27 billion 468 million, over the same period last year, NT $28 billion 229 million fell 2.7%, increased 16.5% more than NT $23 billion 579 million last quarter.

Lianhua electronics fourth quarter results exceeded analysts' expectations. Reuters survey, analysts had expected the fourth quarter net profit of $2 billion 710 million yuan Lianhua electronics. Hu Guoqiang, chairman and CEO, said the company's fourth quarter results were mainly due to the growth of wireless communications, PC chipset and LCD display and other products. Throughout the 2005 fiscal year, the net sales of Lianhua electronics NT $90 billion 776 million, operating loss of NT $2 billion 668 million, net profit of NT $7 billion 27 million.

Lianhua electronics is the world's second largest chip foundry after TSMC, its main customers include TI and Xilinx. Hu Guoqiang said that the company will start from the current quarter of three new customers to produce more advanced process, but the impact on the company's performance to the second or the third quarter to reflect. He said: "after the improvement of production process, our cost structure and production efficiency will be improved." But some analysts believe that it will take time for the company to turn more advanced technology into profit.

JP Morgan analyst Roland - Hu semiconductor (Roland Hsu) said: "although the UMC has advanced production technology, but the company must expand the user group, reduces with the main rival TSMC, the gap between the." 2005 fourth quarter, TSMC gross margin was 49.1%, much higher than the Lianhua electronics of 18.1%. Lianhua electronics is expected in the current quarter profit margins will fall to 75%, down from the previous quarter of 86%.

On the same stage as TSMC, Lianhua electronics is expected in the first quarter product sales will decline slightly, but analysts expect the negative impact of seasonal factors will be less than the same period last year. Lianhua electronics is expected in the first quarter wafer sales will decline 7% to 8% in the previous quarter, the average price fell by 1% to 2%. TSMC expects first quarter sales will decline 6% to 10% over the previous quarter.