United Microelectronics Boasts Q1 Gains, Faces Caution Over Tariff Impact On Future Orders

Taiwan-based United Microelectronics Corp UMC reported fiscal first-quarter results Wednesday.

The company reported quarterly revenue growth of 5.9% year-on-year to $1.74 billion (NT$57.86 billion). It also missed the analyst consensus estimate of $1.81 billion. 

Here’s a breakdown of the release:

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• The revenue decreased by 4.2% Q/Q.
• Earnings per ADS of 9 cents missed the analyst consensus estimate of 10 cents. The stock price gained after the report.
• Revenue from 22 and 28nm was 37% of the wafer revenue (versus 33% a year ago), driven by a 46% Q/Q increase in 22nm revenue from products such as OLED display driver ICs, image signal processors as well as digital TV, WiFi, and audio codec chips.
• The 40nm contribution remained at 16% of sales (versus 18% a year ago). 
• Capacity utilization improved from 65% to 69% Y/Y.
• The gross margin declined to 26.7% from 30.9% a year ago. Capital expenditures totaled $443 million in the quarter.

Outlook: United Microelectronics expects second-quarter wafer shipments to increase by 5-7% and ASP to remain flat. It expects quarterly gross margin of ~30%. The company projected capacity utilization in the mid-70% range for the quarter.

The company reiterated 2025 capex of $1.8 billion.

Co-president Jason Wang projected a moderate rebound in demand across all segments in the second quarter. Beyond that, he expressed caution about wafer demand projections as policies and markets are still adjusting to the recent tariff announcements. United Microelectronics focused on execution of key technology projects, such as the 12nm collaboration with U.S. partner, and ensuring our customers have access to geographically diverse manufacturing options. It also implemented cost-reduction plans and accelerated AI and intelligent manufacturing systems.

The company expects customers to tape out additional 22nm products in the coming quarters. The newly inaugurated Singapore Phase 3 fab will provide a further 22nm capacity to support future growth. Pilot runs are underway, and the company is scheduled to ramp up to volume production in early 2026.

Price Action: UMC stock is up 5.88% at $7.20 premarket at the last check Wednesday.

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