United Micro (UMC) AI Stock Analysis

• Market Cap: $16.59B
• Dividend Yield: 7.3%
• Average Volume (3M): 7.35M
• Price to Earnings (P/E): 13.3
• Beta (1Y): 0.75
• Revenue Growth: 5.46%
• EPS Growth: -26.72%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.12
• Shares Outstanding: 2,511,265,400
• 10 Day Avg. Volume: 5,981,586
• 30 Day Avg. Volume: 7,350,335
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.04
• Enterprise Value/Revenue: 0.07
• Enterprise Value/Gross Profit: 0.24
• Enterprise Value/Ebitda: 0.22
• 1Y Price Target: $6.15
• Price Target Upside: -7.10% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 2

• Rating: 72 Outperform
• Price Target: $7.50 ▲(13.29% Upside)

UMC's overall stock score is driven by strong financial performance and attractive valuation, offset by bearish technical indicators and mixed earnings call sentiment. The company's robust profitability and solid balance sheet provide a strong foundation, while technical analysis suggests caution. Valuation metrics indicate potential undervaluation, but market uncertainties and foreign exchange impacts present risks.

Positive Factors

Geopolitical Advantages

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

Industry Positioning

A strategic partnership or joint investment in specific areas could provide mutual benefits to strengthen their positioning in the mature foundry industry without triggering regulatory concerns.

Merger Benefits

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

Financial Performance

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

Future Earnings Risk

Limited business visibility into 2Q25 from a better-than-expected 1Q could pose a risk to share-price performance.

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 generates revenue primarily through its semiconductor foundry services, which involve manufacturing chips for customers on a contract basis. The company's revenue model is largely based on the production of chips using various technology nodes, with pricing influenced by the complexity of the designs and the technology used. Key revenue streams include wafer fabrication, testing, and packaging services. UMC also benefits from long-term partnerships with major semiconductor design companies and OEMs, which provide a steady flow of orders. Additionally, the company has been investing in advanced manufacturing technologies and expanding its capacity to meet the growing demand for semiconductors across multiple industries, thus enhancing its earnings potential.

United Micro Financial Statement Overview

Summary

United Micro's financial performance is strong, with robust profitability and a solid balance sheet. The company shows consistent revenue growth and effective cash flow management, although there are concerns about the decline in free cash flow growth.

Income Statement

United Micro's income statement shows strong profitability, with a consistent gross profit margin and robust net profit margin. The TTM shows a gross profit margin of 31.16% and a net profit margin of 18.91%. The revenue growth rate from 2023 to TTM is 5.38%, indicating solid growth. However, the slight decline in net income suggests potential challenges in maintaining profit momentum. Overall, the company's profitability and revenue growth are commendable, but maintaining net income growth will be crucial.

Balance Sheet

The balance sheet of United Micro is solid, with a low debt-to-equity ratio of 0.15 and a strong equity ratio of 68.17% in the TTM period. The return on equity (ROE) stands at 11.40%, indicating effective use of equity to generate profits. The company's financial stability is underscored by a significant equity base and prudent leverage practices, positioning it well for future growth. However, a slight increase in total liabilities warrants monitoring.

Cash Flow

United Micro's cash flow statement highlights a strong operating cash flow, with a healthy operating cash flow to net income ratio of 2.18 in the TTM period. Free cash flow growth rate is negative from 2023 to TTM, which is a concern, but the free cash flow to net income ratio remains positive. The company efficiently generates cash from operations, but the decrease in free cash flow suggests potential challenges in capital expenditure management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	237.49B	232.30B	222.53B	278.71B	213.01B	176.82B
Gross Profit	71.10B	75.65B	77.74B	125.76B	72.05B	39.00B
EBITDA	77.52B	97.35B	105.85B	153.72B	102.08B	71.97B
Net Income	39.65B	47.21B	59.69B	89.48B	51.25B	22.86B
Balance Sheet
Total Assets	548.14B	560.17B	546.58B	533.05B	464.43B	377.52B
Cash, Cash Equivalents and Short-Term Investments	123.74B	115.24B	144.88B	178.60B	170.90B	109.57B
Total Debt	53.77B	70.47B	64.16B	45.61B	46.82B	41.41B
Total Liabilities	211.10B	194.46B	202.86B	197.60B	183.22B	141.74B
Stockholders Equity	336.87B	365.45B	343.38B	335.11B	280.98B	235.66B
Cash Flow
Free Cash Flow	32.84B	5.33B	-8.02B	62.98B	40.39B	37.39B
Operating Cash Flow	96.25B	93.87B	86.00B	145.86B	90.35B	65.75B
Investing Cash Flow	-60.84B	-85.94B	-97.79B	-54.43B	-62.16B	-40.11B
Financing Cash Flow	-39.68B	-39.20B	-29.09B	-57.25B	12.49B	-25.60B

United Micro Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 6.62
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UMC, the sentiment is Negative. The current price of 6.62 is below the 20-day moving average (MA) of 6.75, below the 50-day MA of 7.17, and below the 200-day MA of 6.68, indicating a bearish trend. The MACD of -0.13 indicates Negative momentum. The RSI at 35.44 is Neutral, neither overbought nor oversold. The STOCH value of 11.89 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UMC.

United Micro Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TSEM	73 Outperform	$6.57B	33.81	7.41%	―	7.18%	-60.59%
UMC	72 Outperform	$16.59B	13.28	10.98%	7.30%	5.46%	-26.72%
ON	69 Neutral	$20.28B	46.27	5.72%	―	-17.93%	-75.83%
ASX	67 Neutral	$21.42B	20.20	10.97%	3.46%	4.86%	6.44%
STM	66 Neutral	$24.40B	39.35	3.72%	1.16%	-22.97%	-78.58%
Sector *	61 Neutral	$35.45B	8.20	-10.60%	1.91%	8.56%	-9.51%
GFS	54 Neutral	$18.46B	28.15	-1.01%	―	-0.65%	-114.26%