United Microelectronics Corp. Q4 FY2024 earnings call

• Chi-Tung Liu discussed Q4 2024 financial results: consolidated revenue TWD 60.4B, gross margin 30.4%, net income TWD 8.5B. Year-over-year 2024 revenue up 4.4% to TWD 232.3B, gross margin ~32.6%. - Jason Wang highlighted 2024 revenue growth, focus on 22/28-nanometer specialty platforms for networking and display driver applications, investment in advanced packaging, and first quarter 2025 guidance including flat wafer shipments, mid-single digit ASP decline, gross margin higher than 25% (impacted by earthquake), ~70% capacity utilization, and 2025 cash-based CapEx budgeted at USD 1.8B.

For Q4 2024, consolidated revenue was TWD 60.4 billion with a gross margin of 30.4%. Net income attributable to stockholders was TWD 8.5 billion. Year-over-year in 2024, revenue increased 4.4% to TWD 232.3 billion, gross margin was around 32.6%. Revenue breakdown by region: Asia sales in Q4 2024 were about 61%, down 4 percentage points from previous quarter, Europe increased from 5% to 11% in Q4. For the year, Asia revenue increased from 57% in 2023 to 63% in 2024. Application breakdown: Consumer segment declined about 2% to 29%, Communication declined 3% to 39%, others (Automotive, Industrial) increased from 14% to 19% in Q4. Technology breakdown: 22 and 28-nanometer shipment continued to increase, representing about 34% of total revenue in Q4, 40-nanometer increased from 13% to 16% in Q4.

• First quarter 2025: wafer shipments flat, ASP in U.S. dollars decreased by mid-single-digit percentage, gross margin higher than 25% (impacted by January 21 earthquake), capacity utilization rate approximately 70%. - 2025 cash-based CapEx budgeted at USD 1.8 billion.

• Market uncertainties and non-fundamental factors like U.S. tariffs impacting short-term visibility. - Depreciation expenses expected to increase by high 20% in 2025, with peak depreciation to be seen in the next 2-3 years. - Potential impact of one-off pricing adjustments and market dynamics on profitability.

Q: On gross margin guidance for Q1 2025, what are the major factors?

A: Chi-Tung Liu said Q1 margin impacted by ASP decline (one-off) and increased depreciation expenses, with earthquake impact (low single digit) to be compensated by insurance later.

Q: About depreciation increase in 2025?

A: Chi-Tung Liu stated depreciation increase in 2025 will be high 20% for the whole year, with no full quarterly breakdown yet as it varies by tool installation.

Q: On cash dividend policy?

A: Chi-Tung Liu said UMC aims for better than average dividend yield, balancing business growth and shareholder returns for stable cash dividend.

Q: On semi-cycle and UMC's foundry market growth in 2025?

A: Jason Wang said semiconductor industry expected to grow 10% in 2025, foundry market mid to high teens, UMC's addressable market projected low-single-digit growth, with Q1 better than seasonality but short-term visibility limited due to U.S. tariffs.

Q: On pricing assumptions?

A: Jason Wang said pricing strategy unchanged, one-off price adjustment at start of year, 22/28-nanometer revenue contribution to increase to high 30% range to mitigate 28nm competition.

Q: On capacity ramp for Singapore fab?

A: Jason Wang said Singapore P3 production win on track, volume adjusted due to market dynamics, CapEx projection not expected to uptick from current level.

Q: On silicon interposer business?

A: Jason Wang said no plan to expand existing silicon interposer capacity, but broadening advanced packaging offerings beyond 2.5D interposer for future applications.

Q: On geopolitical impacts on customer orders?

A: Jason Wang said UMC's diversified manufacturing provides supply resilience, with multiple dynamics in customer sourcing, and ongoing projects materializing after 2025.

Q: On Europe business growth in Q4?

A: Jason Wang said Q4 Europe growth due to customer inventory modulation in automotive business, with automotive and industrial inventory still high needing time to digest.

Q: On ASP decline in Q1?

A: Jason Wang said blended base, with commodity nodes having deeper erosion and differentiated technology nodes having lower erosion.

Q: On target utilization rate?

A: Jason Wang said current projection around 70% utilization, balancing between different node utilizations, with 8-inch loading under recovery and 28/22-nanometer above average.

Q: On advanced packaging CapEx?

A: Jason Wang said advanced packaging CapEx within current trend, with CapEx focused on technology development and customer-aligned capacity investment.