UMC Reports Second Quarter 2019 Results

Company posts 15.7% gross margin and NT$0.15 EPS  

Second Quarter 2019 Overview1:

  • Revenue: NT$36.03 billion (US$1.16 billion)
  • Gross margin: 15.7%
  • Foundry revenue from 28nm: 13%; Foundry operating margin: 5.3%
  • Foundry capacity utilization rate: 88%
  • Net income attributable to stockholders of the parent: NT$1.74 billion (US$56 million)
  • Earnings per share: NT$0.15; earnings per ADS: US$0.024

TAIPEI, Taiwan — (BUSINESS WIRE) — July 24, 2019United Microelectronics Corporation (NYSE:UMC; TWSE:2303) (“UMC” or “The Company”), a leading global semiconductor foundry, today announced its consolidated operating results for the second quarter of 2019.

Second quarter consolidated revenue was NT$36.03 billion, up 10.6% QoQ from NT$32.58 billion in 1Q19 and down 7.3% YoY from NT$38.85 billion in 2Q18. Consolidated gross margin for 2Q19 was 15.7%. Net income attributable to stockholders of the parent was NT$1.74 billion, with earnings per ordinary share of NT$0.15.

Jason Wang, co-president of UMC, said, “In the second quarter, foundry revenue grew 10.6% QoQ to NT$36.00 billion, leading to a foundry operating margin of 5.3%. Utilization rate increased to 88%, bringing wafer shipments to 1.73 million 8-inch equivalent wafers. 2Q19 results reflected higher contribution from 12" technology nodes, which experienced strength from the wireless communication segment including chips found in entry level to mid-end smartphones, switches and routers. During the quarter, we generated a free cash flow of NT$8.17 billion. We remain committed to strengthening our financial metrics, and on June 19, 2019, UMC’s Board of Directors approved the cancellation of 400 million ordinary treasury shares, which will reduce UMC’s ordinary shares by 3.3%.”

Co-president Wang further commented, “Despite US-China trade tensions creating market uncertainty, we anticipate that specific areas within the wireless communication sector will have a short term upward adjustment in the supply chain, which should lead to a slight increase in wafer demand. However, we have observed that customers are continuing to manage their inventory carefully amid a weakened global economic environment, which may contribute to lower visibility in business forecast during the second half of 2019. In the meantime, we continue to actively implement measures intended to enhance our foundry competitiveness, such as focusing resources to capitalize on our existing strength in mainstream logic and specialty processes while offering more diversified technology platforms to customers.”

Summary of Operating Results

Operating Results

(Amount: NT$ million)

2Q19

1Q19

QoQ %
change

2Q18

YoY %
change

Operating Revenues

36,031

32,583

10.6

38,852

(7.3)

Gross Profit

5,652

2,262

149.9

6,675

(15.3)

Operating Expenses

(5,578)

(4,932)

13.1

(5,213)

7.0

Net Other Operating Income and Expenses

1,687

1,073

57.2

1,719

(1.9)

Operating Income (Loss)

1,761

(1,597)

-

3,181

(44.6)

Net Non-Operating Income and Expenses

(617)

1,247

-

(1,095)

(43.7)

Net Income Attributable to Stockholders of the Parent

1,740

1,201

44.9

3,659

(52.4)

EPS (NT$ per share)

0.15

0.10

 

0.30

 

(US$ per ADS)

0.024

0.016

 

0.048

 

Operating revenues in 2Q19 increased 10.6% to NT$36.03 billion, including NT$36.00 billion from the foundry segment. Revenue contribution from 40nm and below technologies grew to 37%. Gross profit increased 149.9% to NT$5.65 billion, or 15.7% of revenue. Operating expenses increased 13.1% to NT$5.58 billion. Net other operating income was NT$1.69 billion, leading to an operating income of NT$1.76 billion. Net non-operating expense was NT$617 million. Net income attributable to stockholders of the parent was NT$1.74 billion.

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