07.16.2001
UMC cuts staff by 3%

• Development: UMC fired 266 workers last Friday, representing 3% of work force.

• Analysis: Criterion was based on staff performance, and downsizing may extend beyond the two fabs being shut down. Staff cost is a small portion (5% of production cost) of company’s cost structure, so impact on bottom line may be minimal.

• Primasia View: Poor visibility leaves second half performance suspect, albeit extent and timing of sector’s inevitable recovery is the catalyst that continues to hold attraction for longer term investors with time horizons between 6 and 12 months. UMC remains a buy and hold story for all concerned.

LindaLiu@Primasia.com +886-[0]2-2547-8867