UMC shares jump on report of new orders
CNATAIPEI -- Shares of United Microelectronics Corp. (UMC) soared in heavy trading Tuesday on reports that the contract chip-maker received orders from integrated circuit designer MediaTek Inc., dealers said.
September 25, 2013, 12:08 am TWN
The buying also reflected optimism that UMC will start to supply chips using the advanced 28-nanometer technology process in the fourth quarter, which is expected to boost sales and UMC's operating margin, they said.
Shares of UMC gained 3.57 percent to close at NT$13.05 (US$0.44) with 195.9 million shares changing hands, while the weighted index on the Taiwan Stock Exchange ended up 0.07 percent at 8,299.12.
UMC shares attracted strong interest soon after the local bourse opened as investors pounced on the lead provided by the Commercial Times' report on large orders from MediaTek, dealers said.
The stock also got a boost from a 4.57-percent increase in its American depositary receipts on Wall Street overnight.
Foreign institutional investors were upbeat about the Taiwanese chip-maker's potential sales on expectations of strong demand for mobile communications devices through the end of the year, they said.
The gains in Taiwan on Tuesday were limited, however, by technical factors later in the session, which pulled the stock back from the day's high of NT$13.35.
According to the report, UMC recently scored a breakthrough by improving the yield rate of its 28-nm process to over 70 percent, up from around 50 percent at the end of June, helping it win orders from MediaTek, a major supplier of smartphone chips to China's market.
The report said the improved yield rate should help UMC's operating margin rise to 9 percent in the third quarter from 3.6 percent in the second quarter.
UMC 28-nm Process Remains on Schedule
Though UMC declined to comment on the report, the chip-maker said its progress in developing the 28-nm process remains on schedule.
Dealers said the strongest interest in UMC shares on Tuesday may have come from foreign institutional investors on follow-through buying after they were net buyers of 27.40 million UMC shares a session earlier.
Only Mega Financial Holding Co. attracted more interest on Monday from foreign institutional investors, who bought a net 31.03 million shares in the financial services company.
As of Monday, foreign institutional investors owned a 42.76 percent stake in UMC. Based on the size of the stake, dealers said, there was still room for foreign investors to raise their holdings in the chip-maker amid optimism over its future shipments.