United Microelectronics ((UMC)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for United Microelectronics (UMC) presented a nuanced picture of the company’s current financial health and future prospects. While the call highlighted several positive developments, such as revenue growth and strategic expansions, it also acknowledged significant challenges, including margin declines and uncertainties in the latter half of the year. Although there is optimism for the second quarter, the overall outlook remains tempered by these uncertainties.
Revenue and Growth Metrics
UMC reported a consolidated revenue of NT$57.86 billion for the first quarter of 2025, marking a 5.9% increase year-over-year. This growth was primarily driven by a 12% increase in wafer shipments, showcasing the company’s ability to expand its market presence despite challenging conditions.
22 and 28 Nanometer Achievements
The company achieved a record high in revenue from its 22 and 28 nanometer technologies, which accounted for 37% of total sales. Notably, the 22 nanometer segment experienced a remarkable 46% quarter-over-quarter revenue increase, underscoring UMC’s technological advancements and market demand for these nodes.
Singapore Phase 3 Fab Inauguration
UMC inaugurated its new Phase 3 fab in Singapore, with pilot runs already underway. The company expects volume production to commence in early 2026, which is anticipated to bolster its manufacturing capabilities and support future growth.
Strong Cash Position
As of March 31, 2025, UMC maintained a robust cash position of NT$106 billion, providing the company with financial flexibility to navigate market uncertainties and invest in strategic initiatives.
Expected Rebound in Q2 2025
The company anticipates a moderate rebound in demand for the second quarter of 2025, with wafer shipments expected to increase by 5% to 7% sequentially. This forecast reflects a cautious optimism about market recovery in the near term.
Decline in Gross Margin
UMC’s gross margin declined to 26.7%, impacted by lower average selling prices (ASP) and an earthquake. This resulted in a 25% year-over-year decline in net income, highlighting the challenges faced by the company in maintaining profitability.
One-time Price Adjustment Impact
A one-time price adjustment at the beginning of the year contributed to a revenue decline, with ASP declining by about 4% to 5% in the first quarter. This adjustment was a significant factor in the company’s financial performance.
Challenges with Depreciation and Costs
High depreciation costs from new facilities and increased operational expenses further impacted UMC’s financial performance, posing challenges to its cost management strategies.
Limited Visibility and Uncertainty in Second Half of 2025
The company faces uncertainties in the second half of 2025 due to geopolitical tensions and potential tariff impacts, with limited visibility on demand. These factors contribute to a cautious outlook for the remainder of the year.
Weakness in Automotive Segment
UMC’s automotive segment experienced a decline due to softness in microcontrollers, DDI, and power management, coupled with high inventory levels. This segment’s performance remains a concern amid broader industry challenges.
Forward-Looking Guidance
Looking ahead, UMC’s CFO, Chitung Liu, provided guidance for the second quarter, anticipating a 5% to 7% sequential increase in wafer shipments. The company expects average selling prices to remain flat, with a projected recovery in gross margin to approximately 30%. Capacity utilization rates are expected to reach the mid-70% range. UMC plans to maintain its capital expenditure at $1.8 billion for 2025, focusing on technology differentiation, cost reduction initiatives, and expanding its geographic manufacturing footprint to enhance supply chain resilience.
In summary, United Microelectronics’ earnings call reflected a balanced view of achievements and challenges. While the company reported revenue growth and strategic expansions, it also faces significant hurdles, including margin pressures and uncertainties in the latter half of the year. The forward-looking guidance suggests cautious optimism, with expectations of a rebound in the second quarter, but the overall sentiment remains tempered by external uncertainties.