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United Microelectronics Corp. (UMC)
NYSE:UMC
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United Micro (UMC) AI Stock Analysis

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UMC

United Micro

(NYSE:UMC)

Rating:80Outperform
Price Target:
$9.50
▲(27.01%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 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 (UMC) vs. SPDR S&P 500 ETF (SPY)

United Micro Business Overview & Revenue Model

Company DescriptionUnited 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 MoneyUMC generates revenue primarily through its semiconductor foundry services, which involve manufacturing integrated circuits for fabless design companies and other semiconductor firms that do not own manufacturing facilities. The company provides its clients with advanced process technologies, specialty technologies such as embedded high-voltage and radio-frequency solutions, and extensive intellectual property (IP) resources. UMC's revenue model is based on the volume of wafers produced and the complexity of the manufacturing process, with higher-end technologies commanding premium pricing. The company also benefits from long-term partnerships and collaborations with key industry players, which enhance its technological capabilities and market reach.

United Micro Earnings Call Summary

Earnings Call Date:Apr 23, 2025
(Q1-2025)
|
% Change Since: 15.25%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive achievements, such as revenue growth and strategic expansions, alongside significant challenges including margin declines and uncertainties in the second half. While there are positive expectations for Q2, the uncertainties clouding the outlook temper the optimism.
Q1-2025 Updates
Positive Updates
Revenue and Growth Metrics
First quarter of 2025 consolidated revenue was NT$57.86 billion with a 5.9% year-over-year increase in revenue due to a 12% increase in wafer shipments.
22 and 28 Nanometer Achievements
22 and 28 nanometer revenue reached a record high, representing 37% of total sales, driven by a 46% quarter over quarter increase in 22 nanometer revenue.
Singapore Phase 3 Fab Inauguration
Inauguration of new Singapore Phase 3 fab, with pilot runs starting and volume production expected in early 2026.
Strong Cash Position
Cash position remained strong at NT$106 billion as of March 31, 2025.
Expected Rebound in Q2 2025
Anticipated moderate rebound in demand with wafer shipment expected to increase by 5% to 7% sequentially.
Negative Updates
Decline in Gross Margin
Gross margin impacted by lower ASP and an earthquake, falling to 26.7% with a 25% year-over-year net income decline.
One-time Price Adjustment Impact
One-time price adjustment at the beginning of the year contributed to a revenue decline, with ASP declining by about 4% to 5% in Q1.
Challenges with Depreciation and Costs
High depreciation costs from new facilities and increased operational costs impacted financial performance.
Limited Visibility and Uncertainty in Second Half of 2025
Uncertainties in the second half due to geopolitical tensions and potential tariff impacts, with limited visibility on demand.
Weakness in Automotive Segment
Automotive segment declined due to softness in microcontrollers, DDI, and power management, with high inventory levels.
Company Guidance
During UMC's 2025 Q1 earnings call, CFO Chitung Liu provided guidance for the second quarter, highlighting key metrics. The company anticipates a 5% to 7% sequential increase in wafer shipments, with average selling prices (ASP) in U.S. dollar terms expected to remain flat. Gross margin is projected to recover to approximately 30%, and capacity utilization rates are expected to reach the mid-70% range. UMC plans to maintain its 2025 capital expenditure at $1.8 billion. The company is also focusing on technology differentiation and cost reduction initiatives, alongside expanding its geographic manufacturing footprint to strengthen supply chain resilience.

United Micro Financial Statement Overview

Summary
United Micro presents a robust financial profile with strong profitability and a solid balance sheet. The company maintains a low debt-to-equity ratio and effective cash flow management, although it faces challenges in maintaining net income growth and a decline in free cash flow growth.
Income Statement
85
Very Positive
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
88
Very Positive
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
80
Positive
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue232.30B222.53B278.71B213.01B176.82B
Gross Profit75.65B77.74B125.76B72.05B39.00B
EBITDA97.35B105.85B153.72B102.08B71.97B
Net Income47.21B59.69B89.48B51.25B22.86B
Balance Sheet
Total Assets560.17B546.58B533.05B464.43B377.52B
Cash, Cash Equivalents and Short-Term Investments115.24B144.88B178.60B170.90B109.57B
Total Debt70.47B64.16B45.61B46.82B41.41B
Total Liabilities194.46B202.86B197.60B183.22B141.74B
Stockholders Equity365.45B343.38B335.11B280.98B235.66B
Cash Flow
Free Cash Flow5.33B-8.02B62.98B40.39B37.39B
Operating Cash Flow93.87B86.00B145.86B90.35B65.75B
Investing Cash Flow-85.94B-97.79B-54.43B-62.16B-40.11B
Financing Cash Flow-39.20B-29.09B-57.25B12.49B-25.60B

United Micro Technical Analysis

Technical Analysis Sentiment
Positive
Last Price7.48
Price Trends
50DMA
7.56
Negative
100DMA
7.03
Positive
200DMA
6.74
Positive
Market Momentum
MACD
-0.03
Positive
RSI
47.84
Neutral
STOCH
42.57
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 7.48 is below the 20-day moving average (MA) of 7.57, below the 50-day MA of 7.56, and above the 200-day MA of 6.74, indicating a neutral trend. The MACD of -0.03 indicates Positive momentum. The RSI at 47.84 is Neutral, neither overbought nor oversold. The STOCH value of 42.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for UMC.

United Micro Risk Analysis

United Micro disclosed 46 risk factors in its most recent earnings report. United Micro reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

United Micro Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$18.82B13.5711.65%0.63%2.22%-22.39%
76
Outperform
$28.48B27.136.32%0.96%-25.47%-70.07%
74
Outperform
$22.80B21.6111.47%0.24%1.32%4.86%
72
Outperform
$24.91B41.357.85%-18.28%-70.98%
68
Neutral
$22.28B28.15-1.69%-4.42%-120.96%
64
Neutral
$37.91B84.25>-0.01%2.59%-42.35%-100.12%
63
Neutral
£506.53M23.52-8.45%172.52%4.53%-18.72%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
UMC
United Micro
7.48
0.38
5.35%
ASX
ASE Technology Holding Co
10.58
0.49
4.86%
MCHP
Microchip
70.25
-12.47
-15.07%
ON
ON Semiconductor
59.61
-7.93
-11.74%
STM
STMicroelectronics
31.77
-1.32
-3.99%
GFS
GlobalFoundries Inc
40.13
-10.81
-21.22%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 17, 2025