UMC's CEO Hu Tries to Ease Semi Inventory Concerns, Does Just the Opposite (UMC)

| About: United Microelectronics (UMC)

We have talked about how rising semiconductor inventories are likely to get worse short term because manufacturers are still building out capacity at a faster rate than demand is growing. Foundry giant United Microelectronics Corp (NYSE:UMC) says not to worry.

While reiterating its expectations of double-digit quarterly revenue growth for the third quarter, United Microelectronics Corporation (UMC) anticipates its utilization rates will increase amid healthy inventory levels among key customers, according to company chairman and CEO Jackson Hu at a June 12 investors conference.

Hu stressed that there are no inventory concerns among UMC’s key customers despite recent speculation about record-high inventory levels among foundries. He pointed out that utilization rates at UMC’s 8-inch fabs are good and its 12-inch fabs may even report full utilization rates in the second half of 2006.

To Hu, we say Huh? How does increasing utilization ease inventory concerns? The more utilization you have, the more chips you make. If they don’t find their way to customers, they are inventory.

UMC 1-yr chart:

UMC 1-yr