UMC Expects Q4 Wafer Shipments To Decline, Stock Slides

United Microelectronics Corp UMC reported a third-quarter FY23 revenue decline of 24.3% year-on-year to $1.77 billion (NT$57.07 billion), beating the consensus of $1.75 billion. 

The revenue increased by 1.4% Q/Q, driven by favorable foreign exchange and a better product mix.

Earnings per ADS of $0.20 beat the consensus of $0.17.

Revenue from 22 and 28nm grew to 32% of the wafer revenue, while 40nm contributed 13% of sales. 

The gross margin declined by 1,140 basis points to 35.9% due to lower utilization and weak demand across significant end markets. 

Capital expenditure spending totaled $0.57 billion in Q3.

Jason Wang, co-president of UMC, said, "During the third quarter, despite a 2.3% decrease in wafer shipments, quarterly revenue and gross margin remained firm QoQ, which primarily attributed to the demand strength in computing and communication segments, continuous product mix enhancement as well as favorable currency movement."

"From end markets perspective, strength in computing applications were propelled by LCD controller, WiFi, codec and touch IC controllers while shipments in communication segments increased due to demand for RF front end IC and networking chips."

Outlook: UMC expects Q4 FY23 wafer shipments to decline 5% and ASP in USD to stay flat quarter-over-quarter. It expects capacity utilization in the low 60% range.

UMC reiterated a 2023 capex of $3.0 billion.

Price Action: UMC shares are trading lower by 3.29% at $7.19 on the last check Wednesday.