Core Viewpoint - The article discusses the potential impact of the U.S. imposing high tariffs on semiconductor imports from Taiwan, particularly on mature process chips, which could lead to significant adjustments in Taiwan's semiconductor industry and supply chain dynamics [2][3]. Group 1: Tariff Implications - The U.S. is expected to announce results of a national security investigation regarding semiconductor imports, with potential tariffs on mature process chips from Taiwan reaching up to 20% [2]. - Taiwan's semiconductor industry, heavily reliant on exports to the U.S., faces heightened uncertainty due to these potential tariffs, which could disrupt existing supply chains [2][3]. - The article suggests that while the tariffs may not completely destabilize the semiconductor sector, they will likely prompt strategic adjustments, including increased overseas investments and manufacturing [3]. Group 2: Market Conditions - The semiconductor industry is experiencing a downturn, with major IC design firms significantly reducing wafer production for mature processes by 20% to 30% in Q3 compared to Q2, due to various negative factors including weak demand in mobile, networking, and automotive sectors [5][6][7]. - The automotive market is particularly struggling, impacting demand for mature process chips, with major companies like NXP and STMicroelectronics warning of poor market conditions [7]. - The capacity utilization rates for wafer foundries are expected to decline from around 70% in the first half of the year to approximately 60% or lower in the second half, which will adversely affect profit margins [7]. Group 3: Company Strategies - Companies like UMC are investing in R&D to focus on advanced technologies for 5G, AI, IoT, and automotive electronics, with UMC having invested NT$15.6 billion in R&D last year [9]. - UMC is exploring potential collaborations with Intel to enhance process technologies, while World Advanced is focusing on its 8-inch production and plans to build a 12-inch fab in Singapore with a total investment of $7.8 billion [10]. - Powerchip is targeting AI applications and has begun mass production of silicon interposers, contributing to revenue generation [11].

Core Viewpoint - UMC reported a 3.5% year-on-year revenue increase in Q2, reaching NT$58.76 billion, exceeding analyst expectations of NT$57.26 billion. However, the earnings per ADS fell by 36% to NT$3.55, below the expected NT$4.13 [1] Financial Performance - Q2 revenue increased by 3.5% year-on-year to NT$58.76 billion [1] - Earnings per ADS decreased by 36% to NT$3.55, missing analyst expectations [1] Future Outlook - UMC anticipates low single-digit growth in wafer shipments for Q3 [1] - The company expects stable dollar pricing and a capacity utilization rate to remain in the mid-70% range [1]

联电7月30日公布2025年第二季度财报显示，合并营收587.6亿元新台币，净利润89亿元新台币，每股收 益0.71元新台币。 来源：智通财经 ...

Core Viewpoint - UMC's Q2 financial results showed a revenue of $2.01 billion, a 14.9% year-over-year increase, but fell short of market expectations [1] - The company's earnings per American Depositary Share (EPADS) was $0.12, significantly below the expected $0.89 [1] - UMC's net profit attributable to shareholders was approximately NT$8.9 billion (around $304 million) [1] Financial Performance - UMC maintained a gross margin of 28.7% and an operating margin of 18.4%, indicating strong cost control [1] - The revenue contribution from the 22/28nm process reached a record high of 40% [1] - Wafer shipments increased by 6.2% quarter-over-quarter, with capacity utilization rising from 69% to 76% [1] Industry Positioning - UMC focuses on a differentiated strategy in the mature process technology, particularly the 22/28nm nodes, which are seen as key for long-term competitiveness [2] - The company is solidifying its market share in mature processes through specialized applications like OLED driver ICs and RF chips [2] Market Challenges - UMC's management highlighted two main risks: currency fluctuations, particularly the appreciation of the New Taiwan Dollar, which could compress revenue margins [3] - The uncertainty in the supply chain due to U.S. tariff adjustments is prompting UMC to negotiate with clients for production relocation and to expedite the establishment of a new facility in Singapore [3] Future Outlook - For Q3, UMC expects low single-digit growth in wafer shipments, stable dollar pricing, and a capacity utilization rate around 70% [4] - The company plans to invest $1.8 billion in capital expenditures in 2025, focusing on expanding the Singapore facility and developing 12nm technology in collaboration with Intel [4] - The new Singapore facility is expected to begin production in early 2026, enhancing supply chain resilience and meeting diverse geographic customer needs [4] Summary - UMC's Q2 results reflect solid competitiveness in mature processes, with a 40% revenue share from the 22/28nm segment [5] - The semiconductor industry is recovering due to demand from AI and automotive electronics, but geopolitical issues and reliance on high-end equipment remain challenges [5] - UMC's stock price fell by 1.54% to $7.01 following the disappointing Q2 financial performance [5]

Financial Data and Key Metrics Changes - In Q2 2025, consolidated revenue was NT$ 8.9 billion with a gross margin of approximately 28.7% [7] - Net income attributable to shareholders was NT$ 8.9 billion, with earnings per share (EPS) of NT$ 0.71, up from NT$ 0.62 in the previous quarter [10] - Utilization rate increased from 59% in Q1 to 76% in Q2, contributing to a 1.6% sequential revenue increase [8][14] - For the first half of 2025, revenue increased by 4.7% year-over-year, while gross margin decreased from 33.1% in the same period of 2024 to 27.7% [10] Business Line Data and Key Metrics Changes - Revenue from the 22 and 28 nanometer portfolio accounted for 40% of total sales, marking a record high [15] - Consumer application revenue decreased to 33%, while communication application revenue increased to 41% [11] - The revenue contribution from below 40 nanometer technology represented more than half of total revenue, reaching 55% in Q2 [12] Market Data and Key Metrics Changes - Revenue from Europe increased to 8%, while Asia accounted for approximately 67% of total revenue [11] - The company observed a sound demand upside in Q2, partly driven by inventory buildup in anticipation of potential U.S. tariffs [28] Company Strategy and Development Direction - UMC aims to enhance supply chain resilience through the new Phase III facility at the Singapore Fab12i, set to start production in 2026 [15] - The company is focused on maintaining and improving ASP resilience through technology differentiation and product mix [20][21] - UMC plans to actively manage foreign exchange exposure and maintain financial flexibility to navigate macroeconomic uncertainties [16] Management's Comments on Operating Environment and Future Outlook - Management noted that adverse foreign exchange movements could lead to a decline in NT dollar revenue, with a 5% appreciation in the NT dollar resulting in a corresponding 5% reduction in reported revenue [16] - The semiconductor industry is experiencing lower visibility, with expectations for growth in 2025 remaining unchanged despite macroeconomic uncertainties [34][36] - Management expressed confidence in the continued growth of the 22 and 28 nanometer business, supported by strong demand and differentiated technology [57] Other Important Information - The cash-based capital expenditure (CapEx) budget for 2025 remains unchanged at US$ 1.8 billion [12][17] - The company is closely monitoring the inventory situation, which is currently healthy, particularly in the automotive and industrial segments [51] Q&A Session Summary Question: What is the initial outlook on the ASP trend in 2026? - Management stated that they do not provide guidance beyond 2025 but aim to maintain ASP resilience through technology differentiation and product mix [20] Question: How is the tariff impacting customer behavior? - Management observed an inventory buildup in anticipation of potential U.S. tariffs, affecting demand in Q2 and Q3 [28] Question: What is the current pace of ramp-up for the Singapore fab? - The ramp-up for the Singapore facility is projected to start in January 2026, focusing on communication applications [42] Question: What is the outlook for gross margins? - Management aims to improve gross margins back to reasonable levels through technology development and improved product mix [46][48] Question: How is the pricing behavior in the communications segment? - Pricing remains a topic of discussion, influenced by capacity availability, with current pricing behavior being subject to market conditions [82] Question: What is the status of the Intel partnership? - The collaboration with Intel is progressing well, with milestones on track for the 12 nanometer program [61]

Financial Data and Key Metrics Changes - In Q2 2025, consolidated revenue was NT$ 8.9 billion with a gross margin of approximately 28.7% [6][8] - Net income attributable to shareholders was NT$ 8.9 billion, with earnings per share (EPS) of NT$ 0.71, up from NT$ 0.62 in the previous quarter [8][12] - Utilization rate increased from 59% in Q1 to 76% in Q2, contributing to a 1.6% sequential revenue increase [7][12] - For the first half of 2025, revenue increased by 4.7% year-over-year, while gross margin decreased from 33.1% in the same period of 2024 to 27.7% [8][9] Business Line Data and Key Metrics Changes - Revenue from the 22 and 28 nanometer portfolio accounted for 40% of total sales, marking a record high [12][13] - The consumer segment's revenue contribution decreased to 33%, while the communication segment increased to 41% [9][10] - The revenue from below 40 nanometer technology represented more than half of total revenue, reaching 55% in Q2 [10] Market Data and Key Metrics Changes - Revenue breakdown showed Europe at 8%, Asia at 67%, and ICM at 19%, with slight changes from the previous quarter [9] - The company noted a healthy demand in the automotive and industrial segments, while consumer and communication segments remained stable [35][36] Company Strategy and Development Direction - The company plans to enhance supply chain resilience through the new Phase III facility in Singapore, set to start production in 2026 [13][14] - UMC aims to maintain and improve ASP resilience by differentiating technology offerings and increasing revenue contributions from advanced nodes [20][21] - The focus remains on specialty technology solutions, particularly in high voltage and low power applications, to reduce competition with Chinese foundries [70][71] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the impact of U.S. tariff policies and geopolitical uncertainties on demand [14][29] - The company anticipates a mild increase in wafer shipments for Q3, but expects NT dollar revenue to decline due to adverse foreign exchange movements [15][16] - The overall growth outlook for 2025 remains unchanged, with expectations to outgrow the addressable market [54][55] Other Important Information - The cash-based capital expenditure budget for 2025 remains unchanged at US$ 1.8 billion [10][17] - The company is closely monitoring foreign exchange exposure and maintaining financial flexibility to enhance resilience [14][15] Q&A Session Summary Question: ASP trend outlook for 2026 - Management does not provide guidance beyond 2025 but aims to maintain ASP resilience through technology differentiation and product mix [20][21] Question: Tariff impacts on customer behavior - There is observed demand upside in Q2 and Q3, partly driven by inventory buildup in anticipation of potential U.S. tariffs [28][29] Question: Advanced packaging technology development - UMC is preparing advanced packaging solutions to address energy consumption needs in cloud AI and edge AI markets [31][32] Question: Gross margin recovery pathway - Management aims to improve gross margins through technology development and improved product mix, with a realistic goal to return to mid-30s gross margins [45][48] Question: Utilization rates in China - The China facility is running at full capacity, above corporate average, with no pricing differentiation between locations [94]

Core Viewpoint - The semiconductor industry has experienced significant growth, with global semiconductor device sales projected to reach $617.9 billion by 2024, a 162-fold increase since 1977, outpacing global GDP growth [1][3]. Summary by Sections Industry Phases - Phase 1 (1977-1994): The semiconductor industry experienced explosive growth as it filled market demand gaps [5]. - Phase 2 (1995-2009): The market reached saturation, with semiconductor sales growth aligning closely with GDP growth, stabilizing around 0.45% of GDP [5]. - Phase 3 (2010 onwards): The emergence of smartphones and mobile internet led to renewed growth, with an average annual growth rate of approximately 6% [6]. Characteristics Driving Growth - The semiconductor industry serves as the foundation for the information sector, with increasing data generation driving demand for chips [6]. - The existence of Moore's Law ensures continuous performance improvements in chips, fostering rapid technological advancements that benefit the entire semiconductor supply chain [6]. Current Market Dynamics - The semiconductor industry is currently in a phase driven by artificial intelligence (AI), marking the beginning of a fourth growth stage [10]. - The demand for high-performance computing chips has surged due to AI advancements, leading to increased average prices despite stable wafer output [10][14]. Future Outlook - The AI sector is expected to provide long-term growth opportunities for the semiconductor industry, similar to the mobile communications boom [14]. - The anticipated explosion in data generation from AI applications will significantly increase the demand for various types of chips [16].

Financial Performance - Operating Revenues for 2Q25 reached NT$58758 million, a 1.6% increase compared to 1Q25[8] - Net Income Attributable to Shareholders of the Parent was NT$8903 million in 2Q25, up 14.5% from NT$7777 million in 1Q25[8] - EPS (NTD) was 0.71 in 2Q25, compared to 0.62 in 1Q25[8] - For the first six months of 2025, Operating Revenues totaled NT$116617 million, a 4.7% increase year-over-year[10] - Net Income Attributable to Shareholders of the Parent for the first six months of 2025 was NT$16679 million, a 31.2% decrease year-over-year[10] - EPS (NTD) for the first six months of 2025 was 1.34, compared to 1.95 for the same period in 2024[10] Foundry Segment - Wafer Shipments in 2Q25 were 967 thousand (12" wafer equivalent), compared to 910 thousand in 1Q25[7] - Utilization rate in 2Q25 was 76%, compared to 69% in 1Q25[7] - In 2Q25, Asia accounted for 67% of Foundry Segment Sales by Geography[17] - Fabless customers accounted for 81% of Foundry Segment Sales by Customer Type in 2Q25[19] - Communication applications accounted for 40% of Foundry Segment Sales by Application in 2Q25[21] - Technology ≤ 40nm accounted for 53% of Foundry Segment Sales by Technology in 2Q25[23] Capacity and Expenditure - Total capacity in 2Q25 was 1290 thousand (12" equivalent)[24] - The 2025 Foundry Capital Expenditure Plan is $1.8 billion USD, with 90% allocated to 12" and 10% to 8"[25]

Core Viewpoint - Investors in the Electronics - Semiconductors sector should consider United Microelectronics Corporation (UMC) and Nova Ltd. (NVMI) for potential value investment opportunities [1] Valuation Metrics - UMC has a forward P/E ratio of 13.77, while NVMI has a forward P/E of 30.55, indicating UMC is more attractively priced [5] - UMC's PEG ratio is 1.56, compared to NVMI's PEG ratio of 2.10, suggesting UMC offers better value relative to its expected earnings growth [5] - UMC's P/B ratio is 1.54, significantly lower than NVMI's P/B of 7.71, further supporting UMC's valuation advantage [6] Analyst Outlook - UMC holds a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision activity compared to NVMI's Zacks Rank of 3 (Hold) [3] - UMC's strong earnings outlook contributes to its Value grade of A, while NVMI has a Value grade of D, highlighting UMC's superior position in terms of value investment [6]

Core Viewpoint - The semiconductor industry is facing significant challenges due to a combination of factors including the end of the tariff-induced inventory buildup, weaker-than-expected recovery in end-user applications such as mobile, networking, and automotive, and continued pressure from the appreciation of the New Taiwan Dollar [2][3]. Group 1: Market Conditions - Major IC design companies are reportedly cutting wafer foundry orders for mature processes by 20% to 30% in Q3 compared to Q2, indicating a significant correction in demand [2][3]. - The automotive market is particularly weak, impacting demand for mature processes, with major chip manufacturers warning of poor market conditions [3][4]. Group 2: Financial Impact - The capacity utilization rate for mature process foundries is expected to drop from around 70% in the first half of the year to approximately 60% or lower in the second half [4]. - UMC and World Advanced are projected to see their gross margins decline, with UMC's gross margin potentially falling to 25% in the second half of the year [3][4]. - Powerchip has reported a net loss of NT$0.8 per share for Q2, marking its seventh consecutive quarter of losses, with continued pressure expected in the second half [3][4]. Group 3: Industry Outlook - The semiconductor industry is primarily supported by AI demand, with TSMC performing well, while other mature process foundries are struggling due to weak consumer and automotive sector demand [4].