07.17.2001
UMC staying in red thru year-end

• Findings: UMC sees flattish utilization rates in July and August. Communications customers are experiencing 90% order cancellation rates. Relative strength noted in consumer and PC market segments.

• Analysis: We expect 3Q01 utilization rate to decline to 38% from 2Q01 rate of 45%. 4Q01 may see seasonal up-ticks, with utilization returning to 45%. Pricing pressures from fabless customers resulting in further ASP decline in 2H01. Our profit estimate reflects a 50% cut from previous figures, with 2001 est. EPS now at NT$0.29.

• Primasia View: Near term outlook negative, albeit with some encouraging signs. Yet, limited downside on current valuation, which is running close to historical lows.

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