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United Microelectronics Corp. (UMC)
NYSE:UMC
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United Micro
(NYSE:UMC)
Rating:71Outperform
Price Target:
$8.00
▲(17.47% Upside)
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)
Market Cap
$16.95B
Dividend Yield7.09%
Average Volume (3M)6.85M
Price to Earnings (P/E)13.6
Beta (1Y)0.75
Revenue Growth5.46%
EPS Growth-26.72%
CountryUS
Employees20,000
SectorTechnology
Sector Strength96
IndustrySemiconductors
Share Statistics
EPS (TTM)0.12
Shares Outstanding2,511,265,400
10 Day Avg. Volume9,118,644
30 Day Avg. Volume6,847,941
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue0.07
Enterprise Value/Gross Profit0.24
Enterprise Value/Ebitda0.22
Forecast
1Y Price Target
$6.40Price Target Upside-6.02% Downside
Rating ConsensusHold
Number of Analyst Covering2
United Micro Business Overview & Revenue Model
Company DescriptionUnited Microelectronics Corporation (UMC) is a leading global semiconductor foundry headquartered in Taiwan. Established in 1980, UMC specializes in the manufacturing of integrated circuits and offers a wide range of advanced technology processes, including CMOS, bipolar, and RF ICs for various applications. The company serves diverse sectors such as consumer electronics, automotive, industrial, and communications, positioning itself as a key player in the semiconductor industry with a strong focus on innovation and quality.
How the Company Makes MoneyUMC 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 Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q2-2025)
| % Change Since: -4.35%|
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Neutral
UMC reported solid growth in wafer shipments and utilization rates, alongside a strong cash position and advancements in technology and packaging. However, the company faced significant foreign exchange challenges impacting gross margins, and the pricing strategy remains a concern due to market conditions. Despite these issues, UMC maintains a positive outlook with ongoing improvements in its 22- and 28-nanometer portfolios.Q2-2025 Updates
Positive Updates
Increase in Wafer Shipments and Utilization Rate
Wafer shipment in Q2 increased to 967,000, up about 6.3% quarter-over-quarter. Utilization rate increased from 69% in Q1 to 76% in Q2.
Growth in 22- and 28-nanometer Portfolio
Revenue from the 22- and 28-nanometer portfolio continued to grow sequentially, now accounting for 40% of total sales, a record high in both percentage and absolute dollar terms.
Strong Cash Position
Cash remained over TWD 100 billion, reaching about TWD 111 billion at the end of the first half of 2025.
Advanced Packaging and Technology Developments
UMC is preparing its advanced packaging solutions for AI markets and developing the 2.5D interposer and scalable 3D wafer-to-wafer stacking technologies.
Negative Updates
Foreign Exchange Impact on Gross Margin
The unfavorable foreign exchange movement of the NT dollar reduced gross margin by nearly 3 percentage points, keeping it at 28.7%.
Decline in Gross Margin Year-over-Year
Gross margin for the first half of 2025 decreased to 27.7% compared to 33.1% in the same period of 2024.
Challenges in Pricing Strategy
The current market dynamics and ample capacity availability have made pricing a recurring topic, affecting gross margin recovery efforts.
Company Guidance
In the second quarter of 2025, UMC's financial performance showed a modest improvement, with consolidated revenue reaching TWD 58.8 billion, marking a 1.6% sequential increase. The gross margin stood at 28.7%, slightly impacted by the NT dollar's appreciation. Net income attributable to shareholders was TWD 8.9 billion, resulting in earnings per share of TWD 0.71. Wafer shipments increased by 6.3% quarter-over-quarter, reaching 967,000 units, while the utilization rate improved to 76%. Advanced technology revenue from 22- and 28-nanometer nodes comprised 40% of total sales, contributing to a record-high revenue share of 55% from nodes below 40 nanometers. Looking ahead to Q3, UMC anticipates a low single-digit percentage increase in wafer shipments, though revenue in NT dollars may be affected by exchange rate fluctuations. The gross margin is expected to remain similar to Q2, with a mid-70% capacity utilization rate. The company's CapEx budget for 2025 is projected to be USD 1.8 billion, with ongoing strategies to manage foreign exchange risks and enhance financial flexibility.United Micro Financial Statement Overview
Summary
United Micro's financial performance is solid, characterized by strong profitability and a robust balance sheet. The income statement shows consistent revenue growth, though there is pressure on net income. The balance sheet is stable with low leverage, and cash flow management is effective despite 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.85
Very Positive
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.88
Very Positive
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.80
Positive
| 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
Negative
6.81
Price Trends
7.40
Negative
7.10
Negative
6.69
Positive
Market Momentum
-0.21
Positive
34.99
Neutral
27.72
Neutral
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 6.81 is below the 20-day moving average (MA) of 7.09, below the 50-day MA of 7.40, and above the 200-day MA of 6.69, indicating a neutral trend. The MACD of -0.21 indicates Positive momentum. The RSI at 34.99 is Neutral, neither overbought nor oversold. The STOCH value of 27.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $16.95B | 13.57 | 10.98% | 7.09% | 5.46% | -26.72% | |
66 Neutral | $21.95B | 20.40 | 10.97% | 3.51% | 4.86% | 6.44% | |
63 Neutral | $19.26B | 43.94 | 5.72% | ― | -17.93% | -75.83% | |
61 Neutral | $36.31B | 7.01 | -9.37% | 2.01% | 7.73% | -9.28% | |
60 Neutral | $22.43B | 36.11 | 3.72% | 1.17% | -22.97% | -78.58% | |
58 Neutral | $32.89B | 84.25 | -2.24% | 2.82% | -35.70% | -113.08% | |
51 Neutral | $18.16B | 28.15 | -1.01% | ― | -0.65% | -114.26% |
* Technology Sector Average
Performance Comparison
UMC
United Micro
6.81
-1.52
-18.25%
ASX
ASE Technology Holding Co
10.13
0.58
6.07%
MCHP
Microchip
64.50
-11.48
-15.11%
ON
ON Semiconductor
50.01
-21.07
-29.64%
STM
STMicroelectronics
26.25
-3.02
-10.32%
GFS
GlobalFoundries Inc
32.84
-10.72
-24.61%
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.