Company Announcements

22/28nm shipments reached record high as Q3 net income increased 5% sequentially

Third Quarter 2024 Overview¹:

• Revenue: NT$60.49 billion (US$1.91 billion)
• Gross margin: 33.8%; Operating margin: 23.3%
• Revenue from 22/28nm: 35%
• Capacity utilization rate: 71%
• Net income attributable to shareholders of the parent: NT$14.47 billion (US$457 million)
• Earnings per share: NT$1.16; earnings per ADS: US$0.183

TAIPEI, Taiwan--(BUSINESS WIRE)--Oct. 30, 2024-- United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) (“UMC” or “The Company”), a leading global semiconductor foundry, today announced its consolidated operating results for the third quarter of 2024.

Third quarter consolidated revenue was NT$60.49 billion, increasing 6.5% from NT$56.80 billion in 2Q24. Compared to a year ago, 3Q24 revenue increased 6.0%. Consolidated gross margin for 3Q24 was 33.8%. Net income attributable to the shareholders of the parent was NT$14.47 billion, with earnings per ordinary share of NT$1.16.

Jason Wang, co-president of UMC, said, “In the third quarter, we delivered results that were in line with guidance. In particular, wafer shipments grew more than expected, increasing 7.8% sequentially due to strong demand for 22/28nm products. Our strategy is to develop specialty technology solutions that deliver best-in-class performance, and I am pleased to report that revenue in absolute dollar derived from our specialty portfolio hit a record high in the third quarter, accounting for 53.1% of total sales. In our industry, technology is fundamental. We continue to invest significantly in technology development every year to ensure we are ready to support customers’ next-generation product features with more advanced solutions. For instance, our 22nm display driver solution was the first to be made available to the market and offers unparalleled performance, and we foresee strong tape-out momentum in the upcoming months.”

Co-president Wang commented, “With regards to Q4 outlook, we are seeing demand stabilizing across end markets and a clear downward trend in inventory levels. Looking ahead, we have a number of exciting technology and collaboration projects in the pipeline as we continue to align closely with our customers’ product roadmaps. In addition, as we hear consistently from customers, UMC’s diversified manufacturing footprint is also very important in supporting their long-term strategies. Our new fab expansion in Singapore is nearing completion while our collaboration with Intel remains on track. These projects will further enhance our value proposition to customers and strengthen our position in the foundry industry.”

Co-president Wang added, “We released our 2023 Sustainability Report during the third quarter, which is available on our website for all stakeholders to read. I would like to highlight the progress we have made towards our energy transition goals, with renewable energy use doubling in 2023 from the previous year to account for 11.1% of UMC’s total energy consumption. With a 181-megawatt peak renewable energy purchase agreement coming into effect this year, we are on track to achieving our progressive targets of 25% renewable energy by 2025 and 50% by 2030.”

Summary of Operating Results

Third quarter operating revenues increased 6.5% sequentially to NT$60.49 billion. Revenue contribution from 40nm and below technologies represented 48% of wafer revenue. Gross profit grew 2.2% QoQ to NT$20.43 billion, or 33.8% of revenue. Operating expenses increased 3.9% to NT$6.56 billion. Net other operating income was NT$0.23 billion. Net non-operating income totaled NT$2.46 billion. Net income attributable to shareholders of the parent amounted to NT$14.47 billion.

Earnings per ordinary share for the quarter was NT$1.16. Earnings per ADS was US$0.183. The basic weighted average number of shares outstanding in 3Q24 was 12,436,436,695, compared with 12,414,189,313 shares in 2Q24 and 12,371,129,866 shares in 3Q23. The diluted weighted average number of shares outstanding was 12,559,358,115 in 3Q24, compared with 12,529,942,186 shares in 2Q24 and 12,566,773,628 shares in 3Q23. The fully diluted shares counted on September 30, 2024 were approximately 12,602,544,000.

Detailed Financials Section

Operating revenues increased to NT$60.49 billion. COGS increased 8.8% to NT$40.06 billion, which included 10.5% increase in depreciation and 8.2% increase in other manufacturing costs. Gross profit increased 2.2% QoQ to NT$20.43 billion. Operating expenses increased to NT$6.56 billion, as R&D grew 4.4% to NT$4.02 billion or 6.6% of revenue, while Sales & Marketing also grew 5.7% to NT$0.72 billion. Net other operating income was NT$0.23 billion. In 3Q24, operating income increased 1.5% QoQ to NT$14.10 billion.

Net non-operating income in 3Q24 was NT$2.46 billion, primarily due to the NT$2.79 billion in net investment gain, the NT$0.32 billion in net interest income offset by the NT$0.65 billion in exchange loss.

In 3Q24, cash inflow from operating activities was NT$17.35 billion. Cash outflow from investing activities totaled NT$23.93 billion, which included NT$22.30 billion in capital expenditure, resulting in free cash outflow of NT$4.95 billion. Cash outflow from financing was NT$12.75 billion, primarily from NT$37.59 billion in dividend distribution offset by the NT$25.05 billion in bank loans. Net cash outflow in 3Q24 amounted to NT$18.26 billion. Over the next 12 months, the company expects to repay NT$4.97 billion in bank loans.

Cash and cash equivalents decreased to NT$103.41 billion. Days of inventory decreased 3 days to 85 days.

Current liabilities declined to NT$88.27 billion. Short-term credit / bonds increased to NT$30.86 billion while payables on equipment was NT$14.89 billion. Total liabilities decreased to NT$205.80 billion, leading to a debt to equity ratio of 56%.

Analysis of Revenue²

Revenue from Asia-Pacific grew to 65% while business from North America was 26% of sales. Business from Europe declined to 5% while contribution from Japan remained unchanged at 4%.

Revenue contribution from 22/28nm was 35% of the wafer revenue, while 40nm contribution increased to 13% of sales.

Revenue from fabless customers accounted for 85% of revenue.

Revenue from the communication segment increased to 42%, while business from computer applications declined to 13%. Business from consumer applications remained at 31% as other segments decreased to 14% of revenue.

Blended ASP Trend

Blended average selling price (ASP) remained firm in 3Q24.

(To view blended ASP trend, please click here for 3Q24 ASP)

Shipment and Utilization Rate³

Wafer shipments increased 7.8% QoQ to 896K during the third quarter, while quarterly capacity was 1,274K. Overall utilization rate in 3Q24 grew to 71%.

Capacity⁴

Total capacity in the third quarter increased to 1,274K 12-inch equivalent wafers. Capacity in the fourth quarter of 2024 will slightly grow to 1,280K 12-inch equivalent wafers.

⁽¹⁾ One 6-inch wafer is converted into 0.25 (6²/12²) 12-inch equivalent wafer; one 8-inch wafer is converted into 0.44 (8²/12²) 12-inch equivalent wafers. Total capacity figures are expressed in 12-inch equivalent wafers.

CAPEX

CAPEX spending in 3Q24 totaled US$688 million. 2024 cash-based CAPEX budget will be US$3.0 billion.

Fourth Quarter 2024 Outlook & Guidance

Quarter-over-Quarter Guidance:

• Wafer Shipments: Will remain flat
• ASP in USD: Will remain flat
  NTD appreciation will lead to a decline in our reported Q4 NTD revenue
• Gross Profit Margin: Will be close to 30%
• Capacity Utilization: high-60% range
• 2024 CAPEX: US$3.0 billion

Recent Developments / Announcements

Please visit UMC’s website for further details regarding the above announcements

Conference Call / Webcast Announcement

Wednesday, October 30, 2024

Time:5:00 PM (Taipei) / 5:00 AM (New York) / 9:00 AM (London)

A live webcast and replay of the 3Q24 results announcement will be available at

www.umc.com under the “Investors / Events” section.

About UMC

UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor foundry company. The company provides high-quality IC fabrication services, focusing on logic and various specialty technologies to serve all major sectors of the electronics industry. UMC’s comprehensive IC processing technologies and manufacturing solutions include Logic/Mixed-Signal, embedded High-Voltage, embedded Non-Volatile-Memory, RFSOI, BCD etc. Most of UMC’s 12-in and 8-in fabs with its core R&D are in Taiwan, with additional ones throughout Asia. UMC has a total of 12 fabs in production with a combined capacity of more than 400,000 wafers per month (12-in equivalent), and all of them are certified with IATF 16949 automotive quality standards. UMC is headquartered in Hsinchu, Taiwan, plus local offices in the United States, Europe, China, Japan, Korea, and Singapore, with a worldwide total of 20,000 employees. For more information, please visit: http://www.umc.com.

Safe Harbor Statements

This press release 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 regarding anticipated financial results for the third quarter of 2024; the expected wafer shipment and ASP; the anticipated annual budget; capex strategies; environmental protection goals and water management strategies; impact of foreign currency exchange rates; expected foundry capacities; the ability to obtain new business opportunities; and information under the heading “Fourth Quarter 2024 Outlook and Guidance.”

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual performance, financial condition or results of operations of UMC to be materially different from what is stated or may be implied in such forward-looking statements. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, but not limited to: (i) dependence upon the frequent introduction of new services and technologies based on the latest developments in the industry in which UMC operates; (ii) the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; (iii) the risks associated with international business activities; (iv) dependence upon key personnel; (v) general economic and political conditions; (vi) possible disruptions in commercial activities caused by natural and human-induced events and disasters, including natural disasters, terrorist activity, armed conflict and highly contagious diseases; (vii) reduced end-user purchases relative to expectations and orders; and (viii) fluctuations in foreign currency exchange rates. Further information regarding these and other risk factors is included in UMC’s filings with the United States Securities and Exchange Commission, including its Annual Report on Form 20-F. All information provided in this release is as of the date of this release and are based on assumptions that UMC believes to be reasonable as of this date, and UMC does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

The financial statements included in this release are prepared and published in accordance with Taiwan International Financial Reporting Standards, or TIFRSs, recognized by the Financial Supervisory Commission in the ROC, which is different from International Financial Reporting Standards, or IFRSs, issued by the International Accounting Standards Board. Investors are cautioned that there may be significant differences between TIFRSs and IFRSs. In addition, TIFRSs and IFRSs differ in certain significant respects from generally accepted accounting principles in the ROC and generally accepted accounting principles in the United States.

- FINANCIAL TABLES TO FOLLOW -

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¹Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with TIFRSs recognized by Financial Supervisory Commission in the ROC, which is different from IFRSs issued by the International Accounting Standards Board. They represent comparisons among the three-month period ending September 30, 2024, the three-month period ending June 30, 2024, and the equivalent three-month period that ended September 30, 2023. For all 3Q24 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the September 30, 2024 exchange rate of NT$ 31.65 per U.S. Dollar.

² Revenue in this section represents wafer sales

³ Utilization Rate = Quarterly Wafer Out / Quarterly Capacity

⁴ Estimated capacity numbers are based on calculated maximum output rather than designed capacity. The actual capacity numbers may differ depending upon equipment delivery schedules, pace of migration to more advanced process technologies, and other factors affecting production ramp-up.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030558224/en/

Michael Lin / David Wong
UMC, Investor Relations
+ 886-2-2658-9168, ext. 16900
jinhong_lin@umc.com
david_wong@umc.com

Source: United Microelectronics Corporation