United Microelectronics (UMC) Q2 2024 earnings summary

Executive summary

• Q2 2024 consolidated revenue reached NT$56.8 billion, up 4% quarter-over-quarter and nearly flat year-over-year, with gross margin at 35.2% and net income attributable to shareholders at NT$13.79 billion (EPS NT$1.11).

• Wafer shipments increased 2.6% quarter-over-quarter to 831,000 12-inch equivalents; utilization rate improved to 68% from 65% in Q1.

• 22/28nm revenue contributed 33% of total, driven by demand in Wi-Fi and digital TV; consumer and computer segments grew, while communication and IDM segments declined.

• Technology advancements included industry-first 3D IC RF-SOI stacking and a 22nm embedded high-voltage platform for display drivers.

• Net income rose 32% from Q1 but was down 12% year-over-year.

Financial highlights

• Gross profit for Q2 2024 was NT$19.98 billion, up 18% sequentially; operating income rose 19% quarter-over-quarter to NT$13.89 billion.

• Cash and cash equivalents stood at NT$121.23 billion; total equity at NT$356.09 billion at Q2 end.

• ASP remained flat in Q2; Asia accounted for 64% of revenue, North America 25%.

• Net non-operating income was NT$2.53 billion, primarily from investment and interest gains.

• 6-month 2024 EPS was NT$1.95, down from NT$2.58 in the same period last year.

Outlook and guidance

• Q3 2024 guidance: wafer shipments to rise by mid-single digits, ASP in USD to remain firm, gross margin in mid-30% range, and utilization rate to reach ~70%.

• 2024 CapEx budget unchanged at US$3.3 billion, with 95% allocated to 12-inch capacity; 12A capacity to exceed 1,000 12-inch wafer equivalents in Q3.

• Margin pressure anticipated in 2H24 from increased depreciation and higher utility rates.

• Inventory correction cycle expected to end for most segments by year-end, with automotive recovery lagging into Q1 2025.

• End-market demand expected to improve in communication and computing.