UMC Reports Second Quarter 2016 Results

2Q16 28nm revenue more than doubled QoQ, foresee 3Q16 28nm contribution to hit 20%

Second Quarter 2016 Overview1:

  • Revenue: NT$37.00 billion (US$1.15 billion)
  • Gross margin: 22.4%
  • Foundry revenue from 28nm: 17%; Foundry operating margin: 7.1%
  • Foundry capacity utilization rate: 89%
  • Net income attributable to the stockholders of the parent: NT$2.58 billion (US$80.0 million)
  • Earnings per share: NT$0.21; earnings per ADS: US$0.033

TAIPEI, Taiwan — (BUSINESS WIRE) — July 27, 2016United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) (“UMC” or “The Company”), a leading global semiconductor foundry, today announced its consolidated operating results for the second quarter of 2016.

Second quarter consolidated revenue was NT$37.00 billion, up 7.5% quarterly from NT$34.40 billion in 1Q16 and down 2.7% YoY from NT$38.01 billion in 2Q15. 2Q16 consolidated gross margin was 22.4%. Net income attributable to the stockholders of the parent was NT$2.58 billion, with earnings per ordinary share of NT$0.21.

Mr. Po-Wen Yen, CEO of UMC, said “In the second quarter of 2016, our foundry revenue increased 7.5% sequentially to NT$36.87 billion. We achieved foundry operating margin of 7.1%. Overall capacity utilization was 89%, bringing wafer shipments to 1.51 million 8-inch equivalent wafers. As the latest semi inventory cycle came to an end, 2Q16 reflected a return to semiconductor seasonality as chip demand improved. As a result, UMC experienced a surge in 28nm business, especially from communication customers. Many of the chips found in the newly released smartphone models have adopted our 28nm solutions, which helped trigger our 28nm revenue growth that began in 2Q16. For the consumer segment, UMC has also delivered other 28nm volume production ICs in areas such as DTV and set top box to help further boost 28nm utilization. The widespread adoption of our 28nm process technologies underscores the technology readiness and value that UMC provides to the IC industry.”

CEO Yen continued, “Looking into next quarter, we anticipate a slight increase to our overall foundry revenue, with 28nm revenue contribution expected to reach 20% or more. Our 40nm demand is also expected to remain stable. As our advanced node performance remains on track, we do anticipate a decline in 8” demand due to changes in customer mix and market dynamics. While we continue to expand additional 28nm capacity at Fab 12A in Tainan, UMC’s 12” Xiamen operations, 12X, is set to begin pilot production. As such, UMC will accrue higher quarterly depreciation and operating expenses. However, we expect our high 28nm utilization rate and the revenue recognition when 12X enters production at year’s end to somewhat offset a portion of the accrued depreciation and operating expense. We foresee 12X to aggressively capitalize on the fast growing Chinese semiconductor market and provide our customers with a viable solution for local foundry services in China. We believe 12X will play a key role as a critical manufacturing base as it ramps to economy of scale”

Summary of Operating Results

Operating Results
(Amount: NT$ million)   2Q16   1Q16   QoQ %
change
  2Q15   YoY %
change
Net Operating Revenues   36,997   34,404   7.5   38,012   (2.7)
Gross Profit 8,285 5,034 64.6 8,723 (5.0)
Operating Expenses (5,859) (5,065) 15.7 (4,864) 20.5
Net Other Operating Income and Expenses 23 15 53.3 17 35.3
Operating Income (Loss) 2,449 (16) - 3,876 (36.8)
Net Non-Operating Income and Expenses (650) 46 - 1,304 -
Net Income Attributable to Stockholders of the Parent 2,583 210 1,130.0 4,600 (43.8)
EPS (NT$ per share) 0.21 0.02 0.37
(US$ per ADS)   0.033   0.003       0.057    

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