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UMC Reports Decrease in Q4 Revenue, Gross Profit Margin Remains Strong Amid Economic Challenges

UMC Maintains Solid Structural Profitability in 2023 Despite Downturn in Wafer Shipments and Utilization
Taiwan
u 2303.TW Blue Chip 150 Tech 350 Semicon 75
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United Microelectronics Corporation (UMC), a leading wafer foundry, has released its operating report for the fourth quarter of 2023, revealing a mix of challenges and resilience in a tough global economic environment. The company’s consolidated revenue for the quarter was NT$54.96 billion, marking a 3.7% decrease from the NT$57.07 billion in the third quarter and a 19% drop from NT$67.84 billion in the fourth quarter of 2022. However, UMC achieved a gross profit margin of 32.4%, with a net profit attributable to the parent company of NT$13.2 billion and earnings per share (EPS) of NT$1.06.

UMC’s co-general manager Wang Shi noted that extended inventory adjustments in the semiconductor industry, due to the challenging global economy, led to a 2.5% decline in wafer shipments compared to the previous quarter. The company’s overall capacity utilization rate also experienced a slight dip, settling at 66%. Despite these challenges, revenue from 22/28 nanometer products, bolstered by the expanded capacity of the Tainan 12A P6 factory, reached a record high, accounting for 36% of wafer revenue in the fourth quarter.

Reflecting on the entire year, Wang Shi highlighted UMC’s resilience and strategic product portfolio optimization, which led to a mid-single-digit increase in the average selling price in 2023. Although the company saw a significant decline in capacity utilization compared to the previous year, it maintained a solid gross profit margin of 34.9%. This success was attributed to UMC’s diverse customer base and revenue from specialized processes.

Looking forward to the first quarter of 2024, Wang Shi expects a gradual recovery in overall wafer demand, despite a continued cautious approach to inventory by customers. UMC plans to keep collaborating with industry leaders to develop next-generation products through its diversified manufacturing base and differentiated 12-inch special processes. This strategy aims to navigate the competitive market and rising geopolitical tensions effectively.

A key part of UMC’s strategy is the cooperation on the 12nm FinFET process, focusing on cost-effective capacity expansion and technology node upgrades. This collaboration underscores UMC’s commitment to its customers and aims to facilitate their transition to new technology nodes while leveraging the supply chain resilience brought by expanding production capacity in North America. UMC is optimistic that this strategic cooperation will not only accelerate technology development but also expand its potential market by leveraging the complementary strengths of both parties involved.

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