UMC Co-President Wang Optimistic Despite Q4 Challenges, Expects Mild Wafer Demand Increase

United Microelectronics Corp UMC reported a fourth-quarter FY23 revenue decline of 19.0% year-on-year to $1.79 billion (NT$54.96 billion), beating the consensus of $1.70 billion. 

The revenue decreased by 3.7% Q/Q.

Earnings per ADS of $0.17 beat the consensus of $0.15.

Revenue from 22 and 28nm grew to 36% of the wafer revenue, while 40nm contributed 14% of sales. 

The gross margin declined by 1,050 basis points to 32.4% due to lower utilization and weak demand across significant end markets. 

Jason Wang, co-president of UMC, said, “As our Tainan 12A P6 facility continues to ramp, our 22/28nm represented 36% of our Q4 wafer revenue, reflecting record high in revenue as well as percentage of wafer sales.”

He added, “Looking into the first quarter of 2024, we anticipate overall wafer demand will increase mildly, however, customers maintain a cautious approach in their inventory management.”

Outlook: UMC expects first-quarter wafer shipments to increase by approximately 2%-3% and ASP in USD to decrease by 5%. 

It expects capacity utilization in the low 60% range.

UMC expects a 2024 capex of $3.3 billion.

Price Action: UMC shares are trading lower by 1.28% at $7.73 at publication Wednesday.