United Microelectronics (UMC) Q2 2024 earnings summary

Executive summary

• Q2 2024 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 to 831,000 12-inch equivalents, with utilization rate improving to 68% from 65% in Q1.

• 22/28nm revenue contributed 33% of total, driven by Wi-Fi and digital TV demand; 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.

• Net income for H1 2024 was NT$24.20 billion, with EPS of NT$1.95.

Financial highlights

• First half 2024 revenue was NT$111.43 billion, up 0.8% year-over-year; gross margin for H1 was 33.1% (NT$36.88 billion), net income margin 21.8%, and EPS NT$1.95.

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

• Cash and cash equivalents stood at NT$121.23 billion as of June 30, 2024; total equity at NT$356.09 billion.

• Debt to equity ratio increased to 65% due to higher current liabilities and equipment payables.

• EBITDA for H1 2024 was NT$41.14 billion.

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 H2 2024 from higher depreciation and utility costs.

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