United Micro (UMC) AI Stock Analysis

• Market Cap: $19.11B
• Dividend Yield: 4.77%
• Average Volume (3M): 8.73M
• Price to Earnings (P/E): 13.9
• Beta (1Y): 0.71
• Revenue Growth: 2.22%
• EPS Growth: -22.39%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 86
• Industry: Semiconductors
• EPS (TTM): 0.10
• Shares Outstanding: 2,511,301,500
• 10 Day Avg. Volume: 8,434,808
• 30 Day Avg. Volume: 8,726,536
• PEG Ratio: 0.50
• Price to Book (P/B): 7.33
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 39.01
• 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: $6.45
• Price Target Upside: -16.02% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 2

• Rating: 80 Outperform
• Price Target: $9.50 ▲(23.70%Upside)

UMC's overall stock score is driven by strong financial performance, reasonable valuation, and positive technical trends. However, caution is warranted due to potential price pullbacks and uncertainties in future earnings. The positive Q2 guidance provides some confidence amid these risks.

Positive Factors

Geopolitical Factors

Geopolitical dynamics could provide upside as the US government is likely to respond with anti-dumping and anti-subsidy measures, potentially benefiting global trailing-edge foundry companies.

Market Performance

Stronger shipment and UTR guidance 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

Business Visibility

Limited business visibility into future quarters from a better-than-expected performance could pose a risk to share-price performance.

Financial Performance

Higher depreciation expenses are expected to increase by 27-29%, which could impact financial 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 (UMC) is a global semiconductor foundry, providing advanced integrated circuit (IC) manufacturing services. The company operates in the semiconductor industry, specializing in providing high-quality, cost-effective semiconductor manufacturing solutions to a diverse customer base. UMC's core products and services include the fabrication of microchips for a wide range of applications, including communications, consumer electronics, computer peripherals, and automotive electronics.

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

United Micro presents a robust financial profile with strong profitability, a solid balance sheet, and effective cash flow management. The company's consistent revenue growth and prudent leverage provide financial stability. However, challenges include pressure on net income and a 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	235.53B	232.30B	222.53B	278.71B	213.01B	176.82B
Gross Profit	73.41B	75.65B	77.74B	125.76B	72.05B	39.00B
EBITDA	104.15B	97.35B	105.85B	153.72B	102.08B	71.97B
Net Income	44.53B	47.21B	59.69B	89.48B	51.25B	22.86B
Balance Sheet
Total Assets	572.96B	560.17B	546.58B	533.05B	464.43B	377.52B
Cash, Cash Equivalents and Short-Term Investments	116.87B	115.24B	144.88B	178.60B	170.90B	109.57B
Total Debt	57.47B	70.47B	64.16B	45.61B	46.82B	41.41B
Total Liabilities	182.13B	194.46B	202.86B	197.60B	183.22B	141.74B
Stockholders Equity	390.60B	365.45B	343.38B	335.11B	280.98B	235.66B
Cash Flow
Free Cash Flow	21.32B	5.33B	-8.02B	62.98B	40.39B	37.39B
Operating Cash Flow	96.93B	93.87B	86.00B	145.86B	90.35B	65.75B
Investing Cash Flow	-66.53B	-85.94B	-97.79B	-54.43B	-62.16B	-40.11B
Financing Cash Flow	-46.54B	-39.20B	-29.09B	-57.25B	12.49B	-25.60B

United Micro Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 7.68
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 7.68 is above the 20-day moving average (MA) of 7.59, above the 50-day MA of 7.28, and above the 200-day MA of 6.79, indicating a bullish trend. The MACD of 0.13 indicates Positive momentum. The RSI at 54.44 is Neutral, neither overbought nor oversold. The STOCH value of 9.35 is Positive, 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	80 Outperform	$19.11B	13.93	11.65%	4.77%	2.22%	-22.39%
ASX	74 Outperform	$22.40B	21.63	11.47%	0.09%	1.32%	4.86%
STM	71 Outperform	$27.07B	25.65	6.33%	1.02%	-25.35%	-70.00%
ON	65 Neutral	$22.12B	36.71	7.85%	―	-18.28%	-70.98%
MCHP	64 Neutral	$38.02B	84.25	>-0.01%	2.58%	-42.35%	-100.12%
Sector *	63 Neutral	$33.22B	5.99	-11.76%	1.91%	5.50%	-19.96%
GFS	61 Neutral	$21.24B	28.15	-1.69%	―	-4.42%	-120.96%