Gross margin reached 35.2% as operating income increased 19.1% QoQ

Earnings per share in 1H was NT$1.95

Second Quarter 2024 Overview¹:

• Revenue: NT$56.80 billion (US$1.75 billion)

• Gross margin: 35.2%; Operating margin: 24.5%

• Revenue from 22/28nm: 33%

• Capacity utilization rate: 68%

• Net income attributable to shareholders of the parent: NT$13.79 billion (US$425 million)

• Earnings per share: NT$1.11; earnings per ADS: US$0.171

TAIPEI, Taiwan, July 31, 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 second quarter of 2024.

Second quarter consolidated revenue was NT$56.80 billion, increasing 4.0% from NT$54.63 billion in 1Q24. Compared to a year ago, 2Q24 revenue increased 0.9%. Consolidated gross margin for 2Q24 was 35.2%. Net income attributable to the shareholders of the parent was NT$13.79 billion, with earnings per ordinary share of NT$1.11.

Jason Wang, co-president of UMC, said, "In the second quarter, wafer shipments increased 2.6% QoQ and fab utilization rate improved to 68% as we saw notable demand momentum in the consumer segment. Contribution from our 22/28nm business rose sequentially on healthy demand for WiFi and digital TV applications. Together with a favorable exchange rate and improved product mix, second-quarter gross margin was better than what was previously guided. During the quarter, we announced technology updates including a 3D IC solution to stack RFSOI wafers, which is the first of its kind in the industry, and a 22nm embedded high voltage platform, currently the most advanced display driver foundry solution in the market. They reflect UMC’s commitment to building on our leadership across a number of specialty technologies that are crucial for the development of AI, 5G, and automotive."

Co-president Wang commented, "Looking to the third quarter, we expect to see end market dynamics improve further, particularly in the communication and computing segments, which will drive higher fab utilization. Our 22/28nm business remains a promising growth driver, with a number of tape-outs taking place in the second half for applications including display drivers, connectivity and networking. At the same time, we do expect to face some margin pressure going into the second half due to a pickup in depreciation expense related to capacity expansions as well as higher utility rates. Despite these cost challenges, we believe we will continue to demonstrate our resilience as we did during the recent market downturn, and deliver on our strategy of providing differentiated technology solutions and a diversified manufacturing footprint to help our customers to strengthen their supply chain management."

Co-president Wang added, "In pursuit of our net-zero by 2050 goal, UMC continues to take concrete steps to drive emissions reduction in our operations and supply chain, and to increase our use of renewable energy. We are on track to achieving our progressive 2025 and 2030 targets. More details on our ESG progress will be made available to stakeholders in our upcoming Sustainability Report."

Summary of Operating Results

Second quarter operating revenues increased 4.0% sequentially to NT$56.80 billion. Revenue contribution from 40nm and below technologies represented 45% of wafer revenue. Gross profit grew 18.2% QoQ to NT$19.98 billion, or 35.2% of revenue. Operating expenses increased 9.8% to NT$6.31 billion. Net other operating income decreased to NT$0.22 billion. Net non-operating income reached NT$2.53 billion. Net income attributable to shareholders of the parent amounted to NT$13.79 billion.

Earnings per ordinary share for the quarter was NT$1.11. Earnings per ADS was US$0.171. The basic weighted average number of shares outstanding in 2Q24 was 12,414,189,313, compared with 12,414,087,724 shares in 1Q24 and 12,348,986,144 shares in 2Q23. The diluted weighted average number of shares outstanding was 12,529,942,186 in 2Q24, compared with 12,577,525,057 shares in 1Q24 and 12,526,182,161 shares in 2Q23. The fully diluted shares counted on June 30, 2024 were approximately 12,530,243,000.

Detailed Financials Section

Operating revenues increased to NT$56.80 billion. COGS declined 2.4% to NT$36.82 billion. Gross profit grew 18.2% QoQ to NT$19.98 billion. Operating expenses increased to NT$6.31 billion, as R&D grew 13.1% to NT$3.85 billion or 6.8% of revenue, while G&A also increased 6.0% to NT$1.80 billion. Net other operating income was NT$0.22 billion. In 2Q24, operating income increased 19.1% QoQ to NT$13.89 billion.

Net non-operating income in 2Q24 was NT$2.53 billion, primarily due to the NT$1.44 billion in net investment gain, the NT$0.70 billion in net interest income and the NT$0.41 billion in exchange gain.

In 2Q24, cash inflow from operating activities was NT$22.73 billion. Cash outflow from investing activities totaled NT$15.13 billion, which included NT$20.83 billion in capital expenditure, resulting in free cash inflow of NT$1.90 billion. Cash outflow from financing was NT$5.71 billion, primarily from NT$3.00 billion in redemption of bonds and NT$2.50 billion in bank loans. Net cash flow in 2Q24 amounted to NT$2.23 billion. Over the next 12 months, the company expects to repay NT$4.32 billion in bank loans.

Cash and cash equivalents increased to NT$121.23 billion. Days of inventory increased 3 days to 88 days.

Current liabilities increased to NT$124.97 billion due to dividends payable of NT$37.59 billion. Payables on equipment increased to NT$22.36 billion. Total liabilities increased to NT$230.87 billion, leading to a debt to equity ratio of 65%.

Analysis of Revenue²

Revenue from Asia-Pacific was flattish at 64% while business from North America remained unchanged at 25% of sales. Business from Europe declined to 7% while contribution from Japan was 4%.

Revenue contribution from 22/28nm was 33% of the wafer revenue, while 40nm contribution declined to 12% of sales.

Revenue from fabless customers accounted for 87% of revenue.

Revenue from the communication segment declined to 39%, while business from computer applications grew to 15%. Business from consumer applications reached 31% as other segments declined to 15% of revenue.

Blended ASP Trend

Blended average selling price (ASP) remained firm in 2Q24.

(To view blended ASP trend, please click here for 2Q24 ASP)

Shipment and Utilization Rate³

Wafer shipments increased 2.6% QoQ to 831K during the second quarter, while quarterly capacity was 1,257K. Overall utilization rate in 2Q24 increased slightly to 68%.

Capacity⁴

Total capacity in the second quarter increased to 1,257K 12-inch equivalent wafers. Capacity will grow in the third quarter of 2024 to 1,274K 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 2Q24 totaled US$644 million. 2024 cash-based CAPEX budget will be US$3.3 billion.

Third Quarter 2024 Outlook & Guidance

Quarter-over-Quarter Guidance:

• Wafer Shipments: Will increase by mid-single digit %

• ASP in USD: Will remain firm

• Gross Profit Margin: Will be in the mid-30% range

• Capacity Utilization: approximately 70%

• 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, July 31, 2024

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

A live webcast and replay of the 2Q24 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 second 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 "Third 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 -

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 June 30, 2024, the three-month period ending March 31, 2024, and the equivalent three-month period that ended June 30, 2023. For all 2Q24 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the June 30, 2024 exchange rate of NT$ 32.43 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/20240731242433/en/

Contacts

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