Core Viewpoint - United Microelectronics (UMC) has underperformed in the semiconductor industry, with a year-to-date share price decline of 19.9%, contrasting with a 44.3% increase in the Zacks Electronics - Semiconductors industry and a 27.4% rise in the broader Zacks Computer & Technology sector [1][2]. Year-to-Date Performance - UMC's shares have significantly lagged behind peers like Taiwan Semiconductor, which has seen an 83.5% return, and Toshiba, which has lost 7.9% [1]. Factors Contributing to Underperformance - The underperformance is attributed to intense competition in the semiconductor foundry service market, rising supply-chain constraints due to geopolitical tensions, and higher inflationary costs [2]. Growth Opportunities - UMC is experiencing growth in wafer shipments, which increased by 7.8% sequentially in Q3 2024, driven by strong demand for 22 nm and 28 nm products [5]. - The specialty technology portfolio accounted for 53.1% of total sales in Q3 2024, with advanced solutions like the 22-nm display driver technology gaining momentum [6]. Technological Advancements - UMC launched a 22 nm embedded high voltage technology platform in June, enhancing power efficiency and visual experiences for premium displays in mobile devices [7]. - The company is expanding its manufacturing footprint with a new fab in Singapore, critical for meeting increasing demand and providing advanced solutions [8]. Workforce Development - UMC signed a Memorandum of Understanding with Ngee Ann Polytechnic to enhance training for engineering talents, supporting workforce expansion in the semiconductor industry [9]. Strategic Partnerships - UMC's partnerships with major companies like Intel, Infineon, and Cadence are driving growth: - Collaboration with Intel focuses on developing a 12-nm semiconductor process platform, targeting high-growth markets [11]. - Partnership with Infineon expands automotive microcontroller production, addressing rising demand in the automotive sector [12]. - Collaboration with Cadence accelerates time to market for edge AI and wireless communication applications [13]. Earnings Estimates - For Q4 2024, the Zacks Consensus Estimate for UMC revenues is $1.88 billion, reflecting a year-over-year increase of 44.77%, with earnings estimated at 17 cents per share [14]. Valuation Metrics - UMC shares are trading at a significant discount, with a forward 12-month Price/Sales ratio of 2.33X, well below the industry average of 9.22X [16]. Currency Impact - The appreciation of the New Taiwan dollar against the U.S. dollar is expected to lead to a decline in reported NT dollar revenue for Q4 2024, potentially impacting financial results [19].

Financial Position - As of September 30, 2024, total assets of United Microelectronics Corporation amounted to NT$574,292,437 thousand, an increase from NT$547,270,956 thousand as of September 30, 2023, representing a growth of approximately 4.2%[12] - Current assets decreased to NT$193,608,328 thousand as of September 30, 2024, down from NT$219,280,222 thousand as of September 30, 2023, reflecting a decline of about 11.7%[12] - Total non-current assets increased to NT$380,684,109 thousand as of September 30, 2024, compared to NT$327,990,734 thousand as of September 30, 2023, showing an increase of approximately 16.0%[12] - Total liabilities as of September 30, 2024, amounted to $205.8 billion, an increase from $197.3 billion on September 30, 2023, representing a growth of approximately 4.8%[16] - Current liabilities totaled $88.3 billion as of September 30, 2024, compared to $92.1 billion a year earlier, indicating a decrease of about 4.1%[16] - Non-current liabilities reached $117.5 billion, up from $105.2 billion in the previous year, reflecting an increase of approximately 11.7%[16] - The equity attributable to the parent company was $368.2 billion as of September 30, 2024, compared to $349.7 billion a year prior, showing a growth of about 5.3%[16] - Total equity increased to $368.5 billion from $350.0 billion, marking a rise of about 5.4% year-over-year[16] Revenue and Income - Operating revenues for Q3 2023 were $57,068,867, an increase from $40,056,240 in Q3 2022, representing a growth of approximately 42.5%[19] - Net income for Q3 2023 reached $15,965,792, up from $11,965,792 in Q3 2022, indicating a growth of approximately 33.3%[19] - For the nine-month period ended September 30, 2023, net income was $47,794,836, with total comprehensive income of $58,020,170[22] - The company anticipates continued growth in revenues and net income for the upcoming quarters, driven by new product launches and market expansion strategies[19] Expenses and Costs - Total operating expenses for Q3 2023 were $36,607,915, compared to $28,000,000 in Q3 2022, reflecting an increase of approximately 30.9%[19] - Research and development expenses for Q3 2023 totaled $3,255,295, up from $2,401,919 in Q3 2022, which is an increase of approximately 35.6%[19] - The company recognized total other comprehensive loss of $(2,298,651) for the three-month period ended September 30, 2024, compared to a loss of $(1,789,949) in the same period of 2023[198] - The company reported total net other operating income of $961,732 for the nine-month period ended September 30, 2024, significantly lower than $2,750,179 in the same period of 2023[195] Cash Flow - Cash generated from operations for the nine-month period was NT$66,193,708, down from NT$69,403,913 in 2023, reflecting a decrease of 3.2%[24] - Net cash provided by operating activities increased to NT$60,894,868, compared to NT$59,782,937 in the previous year, showing a growth of 1.9%[24] - Total cash and cash equivalents at the end of the period were NT$103,407,426, down from NT$140,641,550 in 2023, representing a decrease of 26.5%[26] Investments - Investments accounted for under the equity method increased to NT$46,844,945 thousand as of September 30, 2024, compared to NT$43,163,604 thousand as of September 30, 2023, marking an increase of approximately 6.2%[12] - The fair value of investments with published price quotations was NT$44,783 million as of September 30, 2024, compared to NT$50,364 million in 2023, indicating a decline of 11.2%[82] - Cash dividends from investments accounted for under the equity method for the nine-month period ended September 30, 2024, were NT$974 million, down from NT$1,870 million in 2023, a decrease of approximately 48.0%[81] Shareholder Equity - The company reported retained earnings of $181.5 billion, an increase from $170.3 billion on September 30, 2023, representing a growth of approximately 6.6%[16] - Cash dividends for the nine-month period ended September 30, 2024, amounted to $37,587,102, with a net income of $38,714,347[22] - Cash dividends for 2023 were set at NT$3.00 per share, down from NT$3.60 per share in 2022, with total cash dividends amounting to NT$37,587,102 compared to NT$45,017,096 in 2022[158][159] Debt and Liabilities - Total long-term loans as of September 30, 2024, amounted to $33,550,489, an increase from $20,656,248 as of December 31, 2023, representing a growth of 62.5%[129] - The total bonds payable as of September 30, 2024, was $33,403,417, a decrease from $38,359,352 as of December 31, 2023[113] - Unsecured bank loans as of September 30, 2024, were $17,068,900, an increase from $13,530,000 as of December 31, 2023[111] Employee Compensation - Total employee benefit expenses reached $27,895,970, a decrease from $29,120,388 in the same period of 2023[189] - Employee compensation distributed in cash for 2023 was $5,439,059, down from $9,160,485 in 2022[192] Other Comprehensive Income - The company reported a share of other comprehensive income (loss) from associates and joint ventures of NT$(65) million for the three-month period ended September 30, 2024, which accounted for (0.53)% of the consolidated total comprehensive income[7] - The share of other comprehensive income (loss) from associates and joint ventures for the three-month period ended September 30, 2024, was NT$(65) million, compared to NT$226 million in 2023[83]

Core Viewpoint - United Microelectronics Corporation (UMC) is conducting its Q4 2024 earnings conference call, focusing on financial results and future guidance [1][2]. Financial Results - UMC's quarterly financial reports are accessible on their website, indicating transparency in financial disclosures [3]. Management Insights - The conference features key presentations from UMC's CFO and President, highlighting the company's focus and guidance for Q4 2024 [2].

Financial Data and Key Metrics - Q3 2024 consolidated revenue was NT$50.5 billion, with gross margins at 33.8% [5] - Net income attributable to stockholders was NT$14.5 billion, and EPS was NT$1.16 [5] - Capacity utilization rate increased slightly to 71% from 68% in the previous quarter [5] - Sequential operating revenue grew 6.5% to NT$60.5 billion, while gross margin declined to 33.8% from 35.2% [6] - Cumulative revenue for the first three quarters of 2024 grew 2.6% to NT$171.9 billion, with a gross margin rate of 33.3% [7] - Cash dividend payout remained above NT$100 billion, reaching NT$103.4 billion at the end of Q3 2024 [8] - Total equity reached NT$368.5 billion at the end of Q3 2024 [8] Business Line Data and Key Metrics - Wafer shipments grew 7.8% sequentially due to strong demand for 22 and 28 nanometer products [13] - Revenue from specialty technology solutions reached a record high, accounting for 53.1% of total sales [13] - 22 to 28 nanometer revenue reached a record high of 35% in Q3 2024, while 40 nanometer remained stable at 13% [10] - Communication segment increased to 42% of revenue, while the computer segment declined to 13% [10] - IDM revenue rebounded to 15% in Q3 2024 [10] Market Data and Key Metrics - Asia represents 65% of total revenue, while Europe declined by 2 percentage points to 5% [9] - The company's 12A facility in Taiwan continues to increase leading-edge capacity, with a full-year capacity increase expected to exceed 7% [11] Company Strategy and Industry Competition - The company focuses on developing specialty technology solutions to deliver best-in-class performance [13] - Significant investments are made annually in technology development to support next-generation product features [14] - The company's diversified manufacturing footprint, including new fab expansion in Singapore and collaboration with Intel, enhances its value proposition [16] - The company revised its annual CapEx budget from NT$3.3 billion to NT$3 billion, reflecting updates to the Singapore capacity expansion schedule [11] Management Commentary on Operating Environment and Future Outlook - Demand is stabilizing across markets, with a clear downward trend in inventory levels [15] - The company expects flat wafer shipments and ASP in Q4 2024, with gross margins close to 30% and capacity utilization in the high 60% range [17] - The company foresees strong momentum in the upcoming months, driven by technology differentiation and customer collaboration [14][16] Other Important Information - The company maintains pricing resilience despite industry oversupply, with no significant changes in blended ASP [9][21] - The company anticipates a one-off pricing adjustment in early 2025, similar to the adjustment made in Q1 2024 [23][24] Q&A Session Summary Question: What is driving the better-than-expected Q4 revenue? - The computing segment is performing slightly better than expected, offsetting mild declines in communication and consumer segments [19] Question: Is there pricing stabilization or further competition expected? - Pricing remains flat for Q4 2024, with resilience demonstrated during demand/supply imbalances [21][22] - A one-off pricing adjustment is expected in early 2025, similar to Q1 2024 [23][24] Question: Why is Q4 gross margin expected to decline to 30%? - Lower capacity utilization (high 50% vs. 71% in Q3) and NT dollar appreciation are key factors [25] - Higher depreciation from capacity expansion will impact margins for several quarters [25][26] Question: What is the outlook for inventory levels and utilization rates? - Inventory levels in communication, consumer, and computing segments have normalized, while automotive and industrial segments may take until Q2 2025 to normalize [30] - Utilization rates are expected to rebound to 80%+ as the market recovers [31][32] Question: What is the strategy for 8-inch capacity? - The company has no plans to reduce 8-inch capacity and expects gradual improvement driven by differentiated technology solutions [34] Question: How is the Intel collaboration progressing? - The 12-nanometer collaboration is on track, with strong customer interest and potential for accelerated production schedules [36][37] - Applications focus on communication and consumer products, with capacity and profit-sharing details to be shared later [39] Question: What is the long-term gross margin outlook? - The company expects gross margins to stabilize in the low 30% to low 40% range post-2025, driven by cost management and technology differentiation [43][44] Question: How is the company managing geopolitical risks? - The company's diversified manufacturing footprint and technology differentiation mitigate oversupply risks and provide supply chain resilience [65][66] - Opportunities exist in customer porting projects and collaborations, such as the Intel partnership [67][69] Question: What is the outlook for RF SOI and OLED driver IC technologies? - The company is gaining market share in RF SOI and expanding its OLED driver IC solutions beyond smartphones [61][63] - The 22-nanometer OLED driver is expected to remain mainstream for the next 2-3 years [64] Question: What is the oversupply situation for 28-nanometer? - Despite oversupply, the company's 22 and 28-nanometer loading remains resilient, with growth expected in communication, computing, and consumer segments [71][72] Question: What is the depreciation growth outlook for 2025? - Depreciation growth in 2025 is expected to be slightly higher than the 20% increase seen in 2024 [77]

UMC UNITED FOR EXCELLENCE UMC 3Q24 Financial Review October 30, 2024 NOTE CONCERNING FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, and as defined in the United States Private Securities Litigation Reform Act of 1995. These forward looking statements include, but are not limited to, statements relating t ...

United Microelectronics Corporation (UMC) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change. The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Esti ...

United Microelectronics Corporation (UMC) has been beaten down lately with too much selling pressure. While the stock has lost 9.1% over the past four weeks, there is light at the end of the tunnel as it is now in oversold territory and Wall Street analysts expect the company to report better earnings than they predicted earlier.How to Determine if a Stock is OversoldWe use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is oversold. This is a ...

Investors interested in Electronics - Semiconductors stocks are likely familiar with United Microelectronics Corporation (UMC) and GlobalFoundries Inc. (GFS) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estim ...

Investors interested in stocks from the Electronics - Semiconductors sector have probably already heard of United Microelectronics Corporation (UMC) and GlobalFoundries Inc. (GFS) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earn ...

Photomick Introduction United Microelectronics Corporation (NYSE:UMC) reported Q2 earnings relatively recently, so I wanted to revisit the company to see how it performed, where it is heading in the long term, and whether my strong buy position still stands. The last time I covered the company was back in April, when I said that the worst seemed to have passed. The latest quarter cemented that view further, and I feel even more confident in the company’s long-term outlook. I think an investment in Unite ...