UMS to boost capacity utilization to 85 p.c

SINGAPORE: The Singapore chip equipment maker UMS Holdings has announced that it will boost capacity utilisation to 85 percent in the third quarter from 65 percent in a booming industry. UMS has Applied Materials as its biggest client.

Sources at the company say that they have a lot of orders from semiconductor clients — more than their current capacity can take. In order to meet the demand, they have taken this step of boosting capacity utilization.

More than 50% of sales from UMS is to Applied Materials, the world's largest semiconductor equipment maker. UMS sources say that they are in full form to take advantage of the rising demand for semiconductor chips — which is fueled by an increase in global spending on electronics such as smartphones and computers.

The company's second-quarter net profit saw a dramatic 62 percent increase to S$7.5 million from the preceding quarter. Revenue rose 43 percent to S$35.3 million.

Despite some changes in the global market, sources at UMS say they are not worried about oversupply. They say the increase in capacity expenditure by big chipmakers is being done to meet the demand for new technologies. Sources also say that the company plans to expand its oil and gas business, to work as a hedge against the cyclical semiconductor industry. It is expected that revenue contribution from the energy sector, which currently accounts for less than 25 percent of UMS total sales, will increase.