UMC swings to Q2 profit, beats expectations

TAIPEI, July 29 - UMC <2303.TW>, the world's No. 2 contract chipmaker, returned to the black with a profit that beat expectations in the second quarter, the latest sign of a recovery in the once-struggling chip foundry sector.

The manufacturer of chips that power many of the world's tech gadgets posted on Wednesday a profit of T$1.547 billion ($47 million) for April-June, better than market forecasts for a T$1.04 billion net profit.

It also said its capital spending for the year would be 25 percent more than previously expected, climbing to $500 million from not more than $400 million previously.

UMC and its bigger rival TSMC <2330.TW> have seen a recovery in recent months, as the effects of China's massive stimulus package to boost domestic consumption kick in.

UMC's shares, which have outperformed the broader market so far this year, ended down 1.07 percent ahead of the results, while the broad TAIEX share index <.TWII> fell 0.83 percent.