United Micro (UMC) AI Stock Analysis

• Market Cap: $17.15B
• Dividend Yield: 5.09%
• Average Volume (3M): 17.35M
• Price to Earnings (P/E): 11.6
• Beta (1Y): 0.79
• Revenue Growth: 1.28%
• EPS Growth: -25.42%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 49
• Industry: Semiconductors
• EPS (TTM): 0.59
• Shares Outstanding: 2,511,671,900
• 10 Day Avg. Volume: 22,775,732
• 30 Day Avg. Volume: 17,346,888
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.49
• Price to Cash Flow (P/CF): N/A
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $6.30
• Price Target Upside: -8.30% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 3

UMC's overall stock score is bolstered by its strong financial performance and attractive valuation, offering solid profitability despite some revenue and profit decline. The company's technical indicators suggest mixed momentum, and the earnings call reveals both growth opportunities and current challenges. Overall, UMC maintains a strong position in the semiconductor industry.

Positive Factors

Geopolitical Strategy

A collaboration could reduce geopolitical risks thanks to the diversified manufacturing bases and clients globally.

Market Demand

Stronger shipment and UTR guidance in 1Q were better than expected, driven by increased consumer electronics demand, likely boosted by tariff and China’s trade-in programs.

Mergers and Acquisitions

A potential merger would create the second largest foundry globally behind TSMC, with improved economies of scale, bargaining power, and the ability to manage competition.

Negative Factors

Depreciation Costs

Higher depreciation expenses are expected to increase by 27-29% in 2025, which could impact financial performance.

Financial Performance

The market cap of GF and UMC could imply high leverage that strains GF’s balance sheet.

Regulatory Concerns

The authorities may oppose the merger due to national security and job displacement reasons.

United Micro Business Overview & Revenue Model

Company Description

United Microelectronics Corporation operates as a semiconductor wafer foundry in Taiwan, Singapore, China, Hong Kong, Japan, the United States, Europe, and internationally. The company provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. It serves fabless design companies and integrated device manufacturers. United Microelectronics Corporation was incorporated in 1980 and is headquartered in Hsinchu City, Taiwan.

How the Company Makes Money

UMC makes money primarily through its foundry services, where it manufactures semiconductor wafers for fabless semiconductor companies and integrated device manufacturers (IDMs) on a contract basis. The company generates revenue by charging its clients for the use of its manufacturing facilities to produce semiconductor devices. UMC's key revenue streams include wafer fabrication services, where customers pay for the production of wafers designed to their specifications. Additionally, UMC benefits from long-term partnerships and collaborations with leading technology companies, which help ensure a steady demand for its manufacturing services. The company's earnings are significantly influenced by the demand for semiconductor components across various industries, technological advancements in chip design, and its capacity to offer competitive pricing and high-quality manufacturing processes.

United Micro Financial Statement Overview

Summary

UMC's financial health is strong, supported by robust profitability and efficient cash flow management. Despite revenue and profit declines in 2024, the company maintains solid margins and a strong balance sheet with low leverage. Continued focus on managing expenses and optimizing cash flows will be key to sustaining its financial performance.

Income Statement

The income statement reveals a robust financial performance with strong gross profit and net profit margins of 32.54% and 20.32%, respectively, for 2024. However, a slight decline in revenue and net income compared to 2023 indicates potential headwinds. Despite this, the company maintains strong EBIT and EBITDA margins of 22.21% and 41.90%, respectively, showcasing effective cost management and profitability.

Balance Sheet

UMC's balance sheet is solid, with a low debt-to-equity ratio of 0.22, indicating prudent financial leverage. The equity ratio stands at 66.26%, reflecting a strong equity base relative to assets. Return on Equity (ROE) is healthy at 12.49%, although slightly lower than the previous year, suggesting stable but slightly reduced efficiency in generating returns from equity.

Cash Flow

The cash flow analysis shows a positive shift with free cash flow improving from a deficit in 2023 to a positive value in 2024. However, the free cash flow to net income ratio remains low at 0.11. The operating cash flow to net income ratio is strong at 1.99, indicating good cash generation relative to net income, though capital expenditures remain substantial.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
232.30B	222.53B	278.71B	213.01B	176.82B
	Gross Profit
75.65B	77.74B	125.76B	72.05B	39.00B
	EBIT
51.61B	57.89B	104.29B	51.69B	22.01B
	EBITDA
97.35B	105.85B	153.72B	102.08B	71.97B
	Net Income Common Stockholders
47.21B	59.69B	89.48B	51.25B	22.86B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
115.24B	144.88B	178.60B	170.90B	109.57B
	Total Assets
570.20B	546.58B	533.05B	464.43B	377.52B
	Total Debt
81.46B	64.16B	45.61B	46.82B	41.41B
	Net Debt
-23.54B	-68.39B	-128.20B	-85.80B	-52.64B
	Total Liabilities
192.02B	202.86B	197.60B	183.22B	141.74B
	Stockholders Equity
377.93B	343.38B	335.11B	280.98B	235.66B
Cash Flow		Free Cash Flow
5.33B	-8.02B	62.98B	40.39B	37.39B
	Operating Cash Flow
93.87B	86.00B	145.86B	90.35B	65.75B
	Investing Cash Flow
-85.94B	-97.79B	-54.43B	-62.16B	-40.11B
	Financing Cash Flow
-39.20B	-29.09B	-57.25B	12.49B	-25.60B

United Micro Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6.87
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UMC, the sentiment is Positive. The current price of 6.87 is above the 20-day moving average (MA) of 6.65, above the 50-day MA of 6.49, and below the 200-day MA of 7.30, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 55.63 is Neutral, neither overbought nor oversold. The STOCH value of 57.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for UMC.

United Micro Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UMC	76 Outperform	$17.15B	11.62	12.65%	5.09%	1.28%	-25.42%
ON	68 Neutral	$14.80B	9.65	18.97%	―	-14.19%	-27.42%
ASX	67 Neutral	$18.01B	17.72	10.32%	2.77%	-0.62%	-1.08%
MCHP	63 Neutral	$20.82B	68.26	4.71%	4.69%	-44.31%	-86.74%
STM	61 Neutral	$17.95B	12.34	9.12%	1.50%	-23.24%	-62.93%
Sector *	57 Neutral	$19.95B	9.66	-12.09%	2.76%	5.40%	-24.89%
GFS	54 Neutral	$18.43B	28.15	-2.42%	―	-8.69%	-125.98%