United Microelectronics (NYSE: UMC) reported Q2 EPS of $0.05, $0.03 better than the analyst estimate of $0.02. Revenue for the quarter came in at $1.28 billion versus the consensus estimate of $1.31 billion.

Second Quarter 2018 Overview1:

• Revenue: NT$38.85 billion (US$1.28 billion)
• Gross margin: 17.2%
• Foundry revenue from 28nm: 15%; Foundry operating margin: 8.4%
• Foundry capacity utilization rate: 97%
• Net Income attributable to stockholders of the parent: NT$3.66 billion (US$120 million)
• Earnings per share: NT$0.30; earnings per ADS: US$0.049

Jason Wang, co-president of UMC, said, “In the second quarter, foundry revenue increased 3.6% sequentially to NT$38.77 billion. Foundry operating margin was 8.4%. Overall capacity utilization reached 97%, bringing wafer shipments to 1.85 million 8-inch equivalent wafers. The operating results from 2Q18 reflected full utilization from 8\" and mature 12\" technologies, driven by strong demand in computing and communications segments. This led to a first half EPS of NT$0.58 while generating NT$13.42 billion in free cash flow. To further take advantage of this healthy demand situation, our Board of Directors approved for the company to supplement UMC’s mature 12\" process capacity through the full acquisition of Fujitsu’s 300mm MIFS Semiconductor fab in Japan. The Board of Directors also approved a plan for our China-based operations to apply for listing on the Shanghai Stock Exchange, led by UMC’s HeJian.”

Co-president Wang continued, “We project third quarter demand outlook to remain flat due to rising inventory levels from slower smartphone digestion and the uncertainty surrounding the ongoing US-China trade tensions. Despite the current market situation, UMC has always focused on expanding our global scale to enhance customer value by providing a diversified manufacturing base across Asia that is also strategically positioned near our Taiwan headquarters for seamless logistical support. UMC’s intention to acquire MIFS Semiconductor and list our China operations on the Shanghai Stock Exchange corresponds with this global expansion strategy and will fuel our long-term foundry competitiveness. We will continue to strive for manufacturing excellence and better position ourselves globally to create benefits for our shareholders, customers and employees.”

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