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UPDATE 1-UMC Dec sales mark biggest drop in near 7 yrs
January 8, 2009 / 7:30 AM / in 9 years

UPDATE 1-UMC Dec sales mark biggest drop in near 7 yrs

(Recasts with details, analyst comments and graphic)

By Baker Li

TAIPEI, Jan 8 (Reuters) - December sales at Taiwan’s UMC (2303.TW), the world’s No.2 contract chip maker, fell 45.5 percent, its biggest drop in near seven years due to weaker tech demand, and the pain could continue into early 2009.

As the global economy slows, UMC (UMC.N) and sector leader TSMC (2330.TW) (TSM.N) have slashed their fourth-quarter guidance after consumers were relactant to spend on new computers, mobile phones and flat-screen TVs that use microchips.

Taiwan’s economy as a whole suffered a severe slump in December, with exports tumbling a record 42 percent. [ID:nTP4588]

United Microelectronics Corp (UMC) said on Thursday it had sales of T$4.61 billion ($139 million) last month, down from T$8.46 billion a year ago and November’s T$6.02 billion.

That brought its total sales to T$92.53 billion in 2008, down 13.3 percent from 2007, the statement said in a statement, without explanation.

For a graphic on UMC's monthly sales, click on: here

“We do not see meaningful upside catalysts with the company dropping to a loss and seeing continued weak trends at most of its leading edge customers,” Credit Suisse analyst Randy Abrams said in a note earlier this week.

U.S. tech bellwether and microchip maker Intel Corp (INTC.O) on Wednesday issued its second revenue warning on the fourth quarter, saying demand for personal computers was even worse than it feared, weighing on shares. [nL8571572]

UMC posted a third-quarter loss, its first net loss in seven years, after slower demand hurt chip sales and prices.

UMC is set to release its October-December quarter earnings and give first-quarter guidance in February.

UMC announced the sales after the Taipei stock market closed on Thursday. UMC shares were unchanged at T$8.06, while Taiwan's main TAIEX share index .TWII shed 5.3 percent, its biggest one-day percentage drop in two months on .

Shares of TSMC, whose December sales due out on Friday, fell 6.7 percent to T$41.55 after Intel’s warning. ($1=T$33.1) (Reporting by Baker Li, Editing by Lincoln Feast)

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