UMC on Monday said its first customer for processors, which are among the hardest chips to manufacture, will be Palo Alto, California-based Sun Microsystems Inc, one of the biggest makers of server computers that run corporate networks and Web sites. The shift in strategy comes as UMC struggles to boost profit amid slumping orders and prices. UMC said profit margin was 41 percent in the first quarter of 2001, a quarter less than the previous quarter and 10 percent less than the same period a year earlier. UMC now makes chips, based on customer designs, used to store information and to drive applications in computers, phones and toys. In December, UMC said it had developed a manufacturing process with International Business Machines Corp and Infineon Technologies AG to build faster and more complicated chips such as processors.
Processors contain millions of transistors interconnected with aluminum or copper on a single chip.
UMC's new process allows more circuitry to be packed onto a chip. That increases computer speed and reduces cost. Its high profit margin would help UMC maintain its margins, especially after they fell quite steeply in the first quarter. Transmeta Corp. UMC received an order to make processors for Advanced Micro Devices Inc, the second-largest maker of the chips after Intel Corp, the Chinese language media reported yesterday. Hinnawi said UMC won't comment on customers without their permission.