United Microelectronics (UMC) Tops Q4 EPS by 10.2c, Revenues Beat

United Microelectronics (NYSE: UMC) reported Q4 EPS of $0.162, $0.102 better than the analyst estimate of $0.06. Revenue for the quarter came in at $1.59 billion versus the consensus estimate of $1.57 billion.

Fourth Quarter 2020 Overview1:

• Revenue: NT$45.30 billion (US$1.59 billion)
• Gross margin: 23.9%; Operating margin: 12.4%
• Revenue from 28nm: 18%
• Capacity utilization rate: 99%
• Net income attributable to stockholders of the parent: NT$11.20 billion (US$393 million)
• Earnings per share: NT$0.92; earnings per ADS: US$0.162

Jason Wang, co-president of UMC, said, “Our business traction in Q3 carried over into Q4, lifting utilization rate to 99% and raising wafer shipments to 2.3 million 8-inch equivalents. The stable capacity utilization was driven by robust end market demand from consumer and computing related applications such as WiFi, Digital TV, micro-controllers, and power management IC. For full year 2020, UMC's revenue grew 26% in USD while operating income surged to NT$22.01 billion, reflecting solid utilization rates across both 8" and 12" facilities and optimization of our blended product mix. In particular, our enhanced 12" product mix primarily resulted from the substantial pick-up in 28nm wafer business as well as our successful integration of USJC’s 12” operations.”

Co-president Wang continued, “Looking into the first quarter, stable demand outlook will lead to an incremental increase in wafer shipments and blended ASP in USD. However, due to the continuing unfavorable foreign exchange rate, we anticipate the appreciation of the NT dollar will offset more than half of the implied growth projected for 1Q. For full year 2021, UMC continues to share the foundry industry's positive view in wafer demand. Hence, we will continue with the company's disciplined and measured capex strategy by allocating a budget of US$1.5 billion to accommodate the strong demand outlook in advanced technologies.”

Co-president Wang added, “ In terms of corporate sustainability, UMC first launched its Corporate Sustainability Committee in the domestic semiconductor industry in 2008, adhering to the vision of "people-oriented, symbiosis with the environment, and co-prosperity with the society," and is committed to the promotion of the ESG (environment, society, governance) three-dimensional sustainability concept. Among them, in terms of environmental sustainability, UMC regards climate change, water and energy management issues as challenges and opportunities for the company. In 2020, UMC revealed its “Green 2025” environmental protection goals to achieve 15% water saving, 15% electricity saving, 25% waste reduction, and 65% reduction in fluorine-containing greenhouse gases. Given Taiwan’s lack of rainfall over the past few months, water conservation and water recycling have become increasingly important themes in helping communities cope with longer-term droughts. By 2025, UMC anticipates the company’s efforts in water and wastewater management will reduce water consumption per product unit by 15% compared to 2015. We will continue to enhance our competitiveness and ensure that continuous and effective water conservation management is conducted in our wafer manufacturing operations to increase the recovery and reuse of water resources.”

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