United Micro (UMC) AI Stock Analysis

• Market Cap: $17.43B
• Dividend Yield: 5.09%
• Average Volume (3M): 15.64M
• Price to Earnings (P/E): 12.6
• Beta (1Y): 0.76
• Revenue Growth: 2.22%
• EPS Growth: -22.39%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 62
• Industry: Semiconductors
• EPS (TTM): 0.55
• Shares Outstanding: 2,511,671,900
• 10 Day Avg. Volume: 12,886,208
• 30 Day Avg. Volume: 15,643,335
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• 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: $6.45
• Price Target Upside: -6.79% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 2

United Micro's stock is robustly positioned in the semiconductor industry, backed by strong financial performance and reasonable valuation. The technical indicators suggest positive momentum, although caution is warranted due to potential overbought signals. The earnings call revealed both growth opportunities and challenges, with uncertainties impacting the outlook. Overall, UMC presents a solid investment case with some areas requiring close monitoring.

Positive Factors

Geopolitical Influence

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.

Innovation and Technology

Continued innovation with new specialty offerings strengthens UMC’s technology roadmap.

Merger Potential

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

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

Inventory Challenges

Prolonged automotive/industrial inventory adjustments may persist, weighing on 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 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's financial performance is strong, with robust profitability and a solid balance sheet. The income statement shows a consistent gross profit margin and solid revenue growth, though net income has declined slightly. The balance sheet is healthy with low debt and effective use of equity. Cash flow management is efficient, though there's a concern with declining free cash flow growth. Overall, financial health is strong but maintaining net income growth is crucial.

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
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: 6.92
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• 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 6.92 is above the 20-day moving average (MA) of 6.72, above the 50-day MA of 6.67, and below the 200-day MA of 7.21, indicating a neutral trend. The MACD of 0.09 indicates Negative momentum. The RSI at 55.20 is Neutral, neither overbought nor oversold. The STOCH value of 50.15 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	79 Outperform	$17.43B	12.59	11.65%	5.09%	2.22%	-22.39%
ASX	74 Outperform	$18.41B	18.66	10.32%	2.62%	-0.62%	-1.08%
STM	69 Neutral	$20.58B	19.73	6.33%	1.31%	-25.35%	-70.00%
ON	68 Neutral	$16.90B	11.02	18.97%	―	-14.19%	-27.42%
MCHP	66 Neutral	$25.28B	82.90	4.71%	3.87%	-44.31%	-86.74%
GFS	59 Neutral	$19.48B	28.15	-2.42%	―	-8.69%	-125.98%
Sector *	59 Neutral	$10.72B	10.37	-6.60%	3.02%	7.37%	-11.29%