United Microelectronics Corp. Q3 FY2024 earnings call

• Q3 2024 results were in line with guidance, with wafer shipment growing 7.8% sequentially due to strong demand for 22- and 28-nanometer products. • Revenue from specialty technology solutions hit a record high, accounting for 53.1% of total sales. • Continues to invest in technology development, such as the 22-nanometer display driver solution. • Singapore fab expansion nearing completion, and collaboration with Intel on 12-nanometer process is progressing well.

The third quarter of 2024 consolidated revenue was TWD 60.5 billion, with a gross margin of 33.8%. Net income attributable to stockholders was TWD 14.5 billion, and earnings per ordinary shares were TWD 1.16. Capacity utilization rate in Q3 was 71%, up from 58% in the previous quarter. Asia represents 65% of total revenue, while Europe declined to 5% from 7%. IDM rebounded to 15% from 13% in the previous quarter. Communication segment increased to 42% from 39%, and computer declined to 13% from 15%. 22/28-nanometer revenue reached a record high of 35% in absolute terms and percentage.

• Q4 2024: Wafer shipments to remain flat, ASP in USD flat, NT dollar appreciation may lead to decline in Q4 NT dollar revenue, gross margin close to 30%, capacity utilization in high 60% range. • 2024 cash-based CapEx budgeted at USD 3 billion. • 2025 outlook: Expect increase in wafer shipments, but customer forecasts remain conservative, with one-off pricing adjustments likely in early 2025.

• Industry oversupply situation impacting pricing and margins. • NT dollar appreciation posing a headwind to revenue. • Geopolitical tensions affecting supply chain and market dynamics, potentially impacting business operations and growth.

Q: On Q4 and 2025 outlook, what's the situation?

A: Jason Wang says Q4 is expected to be flat from a shipment view, with computing segment slightly better but offset by decline in communication and consumer. For 2025, global economic shows signs of recovery but customer forecasts remain conservative with expectation of increased wafer shipments.

Q: On pricing, are we seeing stabilization?

A: Jason Wang states Q4 2024 ASP remains flat, UMC's pricing resilience demonstrated through capacity oversupply, expecting pricing resilience to persist in 2025 with one-off adjustments to align with market dynamics.

Q: On gross margin for Q4, why the decline?

A: Chi-Tung Liu mentions lower capacity utilization rate, NT dollar headwind, and higher depreciation from capacity expansion as reasons for gross margin decline to close to 30%.