1Q24 results in line with guidance with wafer shipments up 4.5% QoQ

First Quarter 2024 Overview¹:

• Revenue: NT$54.63 billion (US$1.71 billion)

• Gross margin: 30.9%; Operating margin: 21.4%

• Revenue from 22/28nm: 33%

• Capacity utilization rate: 65%

• Net income attributable to shareholders of the parent: NT$10.46 billion (US$327 million)

• Earnings per share: NT$0.84; earnings per ADS: US$0.131

TAIPEI, Taiwan, April 24, 2024--(BUSINESS WIRE)--United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) ("UMC" or "The Company"), a leading global semiconductor foundry, today announced its consolidated operating results for the first quarter of 2024.

First quarter consolidated revenue was NT$54.63 billion, declining 0.6% QoQ from NT$54.96 billion in 4Q23. Compared to a year ago, 1Q24 revenue increased 0.8% YoY from NT$54.21 billion in 1Q23. Consolidated gross margin for 1Q24 was 30.9%. Net income attributable to the shareholders of the parent was NT$10.46 billion, with earnings per ordinary share of NT$0.84.

Jason Wang, co-president of UMC, said, "In the first quarter, our wafer shipments increased 4.5% QoQ as we saw a pick up in the computer segment. Despite a slight drop in utilization rate to 65%, we were able to maintain relatively healthy margins due to continuous cost control and operational efficiency efforts. Contribution from our specialty business increased to 57% of total revenue, driven by demand for power management ICs, RFSOI chips, and silicon interposers for AI servers. During the quarter, our teams continued to make good progress on key pipeline projects, both customized solutions for customers as well as new technology platforms to serve high-growth segments within the 5G, AIoT, and automotive markets. This includes embedded high voltage, embedded non-volatile memory, RFSOI, and 3D IC solutions. In line with our policy to provide stable and predictable dividends to our shareholders, UMC’s Board of Directors recently approved shareholder cash distribution of approximately NT$3.00 per share, which will be a higher payout ratio than the previous year’s. This is subject to approval by shareholders at the Annual General Meeting in May."

Co-president Wang commented, "Looking ahead to the second quarter, we expect to see an increase in wafer shipments as the inventory situation in the computing, consumer, and communication segments improves to a healthier level. As for the automotive and industrial segments, demand remains muted as the pace of inventory digestion has been slower than anticipated. While we still expect some lingering impact from macro uncertainties and cost headwinds in the near term, we will continue to invest in technology, capacity, and people to ensure UMC is ready to capture the next phase of growth driven by 5G and AI innovations."

Co-president Wang added, "UMC is proud to be the only semiconductor company globally to receive double "A" rating in CDP’s 2023 Climate Change and Water Security assessment, the foremost standard amongst investors and other stakeholders for measuring transparency and action on environmental issues, for two consecutive years. This is an incredible achievement and I commend all our teams for their commitment to minimizing the environment impact of our business and helping UMC become the sustainability leader in our industry."

Summary of Operating Results

First quarter operating revenues declined 0.6% sequentially to NT$54.63 billion. Revenue contribution from 40nm and below technologies represented 47% of wafer revenue. Gross profit declined 5.1% QoQ to NT$16.90 billion, or 30.9% of revenue. Operating expenses decreased 13.4% to NT$5.75 billion. Net other operating income decreased to NT$0.51 billion. Net non-operating income totaled NT$1.06 billion. Net income attributable to shareholders of the parent amounted to NT$10.46 billion.

Earnings per ordinary share for the quarter was NT$0.84. Earnings per ADS was US$0.131. The basic weighted average number of shares outstanding in 1Q24 was 12,414,087,724, compared with 12,414,087,724 shares in 4Q23 and 12,348,880,384 shares in 1Q23. The diluted weighted average number of shares outstanding was 12,577,525,057 in 1Q24, compared with 12,589,138,701 shares in 4Q23 and 12,597,236,266 shares in 1Q23. The fully diluted shares counted on March 31, 2024 were approximately 12,577,525,000.

Detailed Financials Section

Operating revenues decreased to NT$54.63 billion. COGS grew 1.6% to NT$37.73 billion, which included 3.7% increase in depreciation. Gross profit fell 5.1% QoQ to NT$16.90 billion. Operating expenses declined to NT$5.75 billion, as Sales & Marketing fell 16.9% to NT$0.68 billion, R&D decreased 13.6% to NT$3.41 billion or 6.2% of revenue, and G&A also declined 11.8% to NT$1.70 billion. Net other operating income was NT$0.51 billion. In 1Q24, operating income declined 6.1% QoQ to NT$11.67 billion.

Net non-operating income in 1Q24 was NT$1.06 billion, mainly reflecting the NT$0.70 billion in exchange gain and the NT$0.68 billion in net interest income partially offset by the NT$0.32 billion in net investment loss.

In 1Q24, cash inflow from operating activities was NT$20.82 billion. Cash outflow from investing activities totaled NT$29.92 billion, which included NT$29.00 billion in capital expenditure, resulting in free cash outflow of NT$8.18 billion. Cash outflow from financing was NT$6.44 billion, primarily from NT$3.89 billion in bank loans and NT$2.10 billion in redemption of bonds. Net cash outflow in 1Q24 amounted to NT$13.12 billion. Over the next 12 months, the company expects to repay NT$2.74 billion in bank loans.

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Cash and cash equivalents decreased to NT$119.43 billion. Days of inventory declined 4 days to 85 days.

Current liabilities decreased to NT$88.40 billion. Long-term credit/bonds decreased to NT$43.45 billion. Total liabilities decreased to NT$188.85 billion, leading to a debt to equity ratio of 50%.

Analysis of Revenue²

Revenue from Asia-Pacific increased to 63% while business from North America grew to 25% of sales. Business from Europe declined to 8% while contribution from Japan remained at 4%.

Revenue contribution from 22/28nm declined to 33% of the wafer revenue, while 40nm contribution remained unchanged at 14% of sales.

Revenue from fabless customers accounted for 82% of revenue.

Revenue from the communication segment accounted for 48%, while business from computer applications remained at 13%. Business from consumer applications was 23% as other segments declined to 16% of revenue.

Blended ASP Trend

Blended average selling price (ASP) declined in 1Q24.

(To view blended ASP trend, please click here for 1Q24 ASP)

Shipment and Utilization Rate³

Wafer shipments increased 4.5% QoQ to 810K in the first quarter, while quarterly capacity was 1,212K. Overall utilization rate in 1Q24 declined to 65%.

Capacity⁴

Total capacity in the first quarter increased to 1,212K 12-inch equivalent wafers. Capacity will grow in the second quarter of 2024 to 1,257K 12-inch equivalent wafers, primarily reflecting the continuous capacity expansion at 12A P6 facility.

CAPEX

CAPEX spending in 1Q24 totaled US$924 million. 2024 cash-based CAPEX budget will be US$3.3 billion.

Capital Expenditure by Year - in US$ billion

2024 CAPEX Plan

Second Quarter 2024 Outlook & Guidance

Quarter-over-Quarter Guidance:

• Wafer Shipments: Will increase by low single digit %

• ASP in USD: Will remain firm

• Gross Profit Margin: Will be approximately 30%

• Capacity Utilization: mid-60% range

• 2024 CAPEX: US$3.3 billion

Recent Developments / Announcements

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

Conference Call / Webcast Announcement

Wednesday, April 24, 2024

Time: 5:00 PM (Taipei) / 5:00 AM (New York) / 10:00 AM (London)

A live webcast and replay of the 1Q24 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: https://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 first 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 "Second 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 March 31, 2024, the three-month period ending December 31, 2023, and the equivalent three-month period that ended March 31, 2023. For all 1Q24 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the March 31, 2024 exchange rate of NT$ 31.99 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/20240424961964/en/

Contacts

Michael Lin / David Wong
UMC, Investor Relations
+ 886-2-2658-9168, ext. 16900
[email protected]
[email protected]