United Microelectronics Misses On Q1 Revenue, Beats Earnings, Expands Gross Margins

United Microelectronics Corp’s UMC reported first-quarter FY21 revenue growth of 11.4% year-on-year to $1.65 billion (NT$47.10 billion), missing analyst estimate of $1.68 billion.

Earnings: Revenue contribution from the Asia Pacific rose to 63% from 56% last year, North American revenue contribution declined from 29% to 23%. Revenue contribution from Europe rose to 8%, and Japan’s contribution declined from 9% to 6%.

Revenue from fabless customers declined from 88% in Q1 FY20 to 86% in Q1 FY21. Revenue contribution from computers rose from 13% in Q1 FY20 to 16% in Q1 FY21. 

Communication revenue contribution declined from 54% to 46%, while Consumer revenue contribution rose from 24% to 27%, and Other revenue contribution rose from 9% to 11%.

UTM’s gross margin expanded 730 basis points to 26.5%.

Strong wafer demand drove full utilization of the company’s manufacturing sites, bringing overall wafer shipments to 2.37 million 8-inch equivalents, stated UMC co-President, Jason Wang. The higher contribution of its 28nm technologies from strong wafer demand for digital TV, set-top box, and connectivity chips designed into smartphones drove the gross profit growth, said Wang. 

The 28nm revenue represented 20% of the wafer business. The company had started to ship 22nm products leading to their revenue recognition in 1Q21. The company estimated a material pickup in 22nm product tape-outs, added Wang. Revenue contribution from 40nm and below technologies remained at 40%.

EPS rose 347.4% to $0.149 (NT$0.85), beating the analyst estimate of $0.1.

The company generated NT$18.3 billion in operating cash flow. It held $107.3 billion in cash and equivalents.

Guidance: The capital expenditure (Capex) for Q1 FY21 was $275 million. Full-year 2021 Capex estimate was $2.3 billion, including the company’s collaborative Fab 12A P6 expansion plan with its customers.

The Q2 FY21 wafer shipment is estimated to increase by 2% quarter-on-quarter. The ASP in $ is expected to rise between 3-4%.

Price action: UMC shares traded higher by 0.37% at $10.86 in the premarket session on the last check Wednesday.

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