United Microelectronics Corp. Q1 FY2025 earnings call

• First quarter results were in line with previous guidance, with flattish wafer shipment and a one-time pricing adjustment.
• 22 and 28 nanometer revenue reached a record high, driven by 46% QoQ increase in 22 nanometer revenue from products like OLED display driver ICs, ISPs, etc.
• Inaugurated new Singapore Phase 3 fab, with pilot runs underway and scheduled to ramp up to volume production in early 2026.
• Board proposed a cash dividend of NT$2.85 per share subject to AGM approval.
• Focus on second quarter with moderate demand rebound, working closely with customers, strengthening competitive advantage via key technology products, implementing cost reduction plans, and accelerating AI/intelligent manufacturing systems.

UMC's first quarter 2025 consolidated revenue was NT$57.86 billion, with a gross margin of around 26.7%. Net income attributable to the stockholder of the parent was NT$7.78 billion, and earnings per ordinary share was NT$0.62. Wafer shipment was flat sequentially but up 12% year over year. Wafer revenue declined 4.2% sequentially to NT$57.85 billion due to a one-time price adjustment and earthquake impact. Gross margin was 26.7% (NT$15.4 billion) and is expected to recover. Operating expenses were 10.6% of total revenue (NT$6.1 billion), resulting in operating income around NT$9.7 billion. Cash position was over NT$100 billion (NT$106 billion at end of March), and equity was NT$390 billion. Revenue breakdown: Asian customers accounted for 56% of total revenue, North America 22%, IDM 10-18%. Consumer segment was strong driven by Wi-Fi, DTV, etc. 40-nanometer and below revenue was over 50% (53% in Q1), with 22 and 28 nanometer revenue making up 37% of total revenue.

• Wafer shipment to increase 5% to 7% sequentially in Q2.
• ASP in U.S. dollar terms to remain flat.
• Gross margin expected to back to approximately 30%.
• Capacity utilization rate to recover to mid-70% range.
• Cash-based CapEx to remain unchanged at about $1.8 billion.

• Trade tensions and tariff uncertainties posing risks to market demand visibility.
• Geopolitical risks potentially impacting supply chain and customer order behaviors.
• Higher inventory levels in automotive segment, leading to more cautious outlook for auto market recovery.

Q: How are tariffs affecting customer order behaviors for Q2 and second half, and impact on business planning?

A: UMC collaborates closely with customers, has a geographically diversified manufacturing footprint, and while little change observed for Q2, uncertainty in second half exists. Net impact for Q2 is limited.

Q: Potential disruptions on pricing and margin due to tariffs?

A: UMC doesn't compete purely on pricing, works with customers transparently to co-work on solutions.

Q: Utilization rate in Q1 and Q2 for 28-nanometer, and mix of 22 nanometer?

A: Company-wide utilization mid-70% in Q2, 22/28nm is a key growth driver, with 22nm alone more than mid-teen percentage of total sales.

Q: Update on partnership with Intel on 12 nanometer?

A: Joint development on track, verifying silicon performance, early PDK ready for first wave of customers by 2026 as planned.

Q: Opportunities to work with other U.S. IDMs?

A: UMC has plenty of U.S. based IDM customers, continues to explore strategic collaborations to enhance shareholders value.

Q: Growth margin trends going forward?

A: Dependent on product mix, pricing, utilization rate, forex movement, COGS; initiatives taken to enhance margin including business engagement, technology differentiation, etc.

Q: Demand trends across key end markets?

A: Consumer segment grew in Q1, Q2 expected growth in computing, communications, consumer; automotive expected flat in Q2 with high inventory.

Q: Thoughts on accelerating Singapore P3 capacity plan?

A: Future capacity ramp depends on customer needs, current plan is production ramp in early 2026.

Q: Details on advanced packaging and Intel collaboration impact on margins?

A: Key focus on 3D wafer-to-wafer, RF front-end modules, etc.; margin enhancement depends on capacity utilization, with U.S. manufacturing having potential higher costs.