UMC(UMC) - 2024 Q2 - Quarterly Report

Review Report of Independent Auditors Conclusion and Scope Ernst & Young, Taiwan, concluded that UMC's consolidated financial statements for H1 2024 and 2023 are fairly presented based on a limited scope review - The auditors issued a clean review conclusion, finding no material misstatements in the financial statements[6] - The review excluded certain equity-method associates and joint ventures, representing 5.12% of total consolidated assets, relying on other auditors' reports[8] Consolidated Financial Statements Consolidated Balance Sheets Total assets increased to NT$587.0 billion by June 30, 2024, driven by PP&E, while liabilities rose and equity slightly decreased Key Balance Sheet Items (in thousands of NTD) | Account | June 30, 2024 | Dec 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Total Current Assets | $207,214,698 | $216,797,392 | $239,032,757 | | Property, Plant and Equipment | $274,030,951 | $239,123,248 | $198,618,079 | | Total Assets | $586,961,945 | $559,186,927 | $553,195,664 | | Total Current Liabilities | $124,973,558 | $99,014,733 | $142,978,303 | | Total Liabilities | $230,870,264 | $199,608,355 | $226,307,619 | | Total Equity | $356,091,681 | $359,578,572 | $326,888,045 | Consolidated Statements of Comprehensive Income Operating revenues slightly increased in H1 2024, but operating income, net income, and EPS all declined year-over-year Six-Month Performance Comparison (in thousands of NTD, except EPS) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Operating Revenues | $111,431,389 | $110,505,855 | | Gross Profit | $36,882,654 | $39,476,592 | | Operating Income | $25,555,933 | $30,155,441 | | Net Income | $24,204,809 | $32,281,220 | | Basic EPS (NTD) | $1.95 | $2.58 | | Diluted EPS (NTD) | $1.93 | $2.53 | Three-Month Performance Comparison (in thousands of NTD, except EPS) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Operating Revenues | $56,799,290 | $56,296,408 | | Operating Income | $13,891,432 | $15,674,743 | | Net Income | $13,775,214 | $15,896,673 | | Basic EPS (NTD) | $1.11 | $1.27 | Consolidated Statements of Changes in Equity Total equity decreased to NT$356.1 billion by June 2024, primarily due to NT$37.6 billion in cash dividends, partially offset by net income - Key changes in equity for H1 2024 include NT$24.2 billion net income, NT$37.6 billion cash dividend distribution, and NT$9.3 billion other comprehensive income from foreign operations translation[19] Consolidated Statements of Cash Flows Net cash from operations increased to NT$43.5 billion in H1 2024, while investing and financing activities resulted in a net decrease in cash Cash Flow Summary (in thousands of NTD) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $43,547,628 | $40,724,027 | | Net Cash used in Investing Activities | $(45,046,127) | $(53,252,770) | | Net Cash provided by (used in) Financing Activities | $(12,144,390) | $2,407,942 | | Net Decrease in Cash | $(10,889,220) | $(10,721,885) | - Acquisition of property, plant, and equipment was the largest cash outflow at NT$48.5 billion for the six-month period[22] Notes to Consolidated Financial Statements 1. History and Organization UMC, a Taiwan-incorporated semiconductor wafer foundry since 1980, is listed on both the TWSE and NYSE - UMC is a semiconductor wafer foundry established in 1980, with dual listings on the TWSE and NYSE[25] 6. Contents of Significant Accounts This section details significant balance sheet and income statement accounts, including PP&E increases, revenue disaggregation, and equity changes Property, Plant and Equipment Net PP&E significantly increased to NT$274.0 billion by June 2024, driven by NT$50.5 billion in additions from capital expenditure PP&E Movement (Assets Used by the Company, in thousands of NTD) | Description | Six Months Ended June 30, 2024 | | :--- | :--- | | Beginning Balance (Jan 1, 2024) | $237,376,554 (Net) | | Additions | $50,452,113 | | Disposals | $(17,522) (Net) | | Depreciation | $(20,376,482) | | Ending Balance (June 30, 2024) | $272,299,801 (Net) | Equity The company's dividend policy allows 20-100% of distributable earnings as cash dividends, with NT$3.00 per share approved for FY2023 Dividend Distribution | Fiscal Year | Appropriation of Earnings (in thousands NTD) | Cash Dividend per Share (NTD) | | :--- | :--- | :--- | | 2023 | $37,587,102 | $3.00 | | 2022 | $45,017,096 | $3.60 | - The cash dividend per share for 2023 was adjusted to NT$3.00011747 due to restricted stock cancellation[116] Operating Revenues H1 2024 operating revenues slightly increased to NT$111.4 billion, primarily from wafer sales, with Taiwan showing significant growth Revenue by Geography (Six Months Ended June 30, in thousands of NTD) | Region | 2024 | 2023 | | :--- | :--- | :--- | | Taiwan | $40,828,087 | $31,509,653 | | USA | $27,722,802 | $31,044,831 | | China (includes Hong Kong) | $16,861,007 | $14,138,303 | | Korea | $12,920,950 | $13,753,012 | | Europe | $8,354,862 | $12,532,246 | | Japan | $4,741,566 | $7,522,787 | | Total | $111,431,389 | $110,505,855 | Revenue by Product (Six Months Ended June 30, in thousands of NTD) | Product | 2024 | 2023 | | :--- | :--- | :--- | | Wafer | $105,885,331 | $105,070,128 | | Others | $5,546,058 | $5,435,727 | | Total | $111,431,389 | $110,505,855 | Earnings Per Share Basic EPS decreased to NT$1.95 and diluted EPS to NT$1.93 for H1 2024, reflecting lower net income compared to H1 2023 Earnings Per Share (NTD) | EPS Type | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Basic | $1.95 | $2.58 | | Diluted | $1.93 | $2.53 | 7. Related Party Transactions Significant related party transactions include NT$1.44 billion in operating revenues from associates and NT$534 million in FARADAY share acquisitions - Operating revenues from associates reached NT$1,438 million in H1 2024, an increase from the prior year[160] - The company acquired 1,723 thousand shares of FARADAY TECHNOLOGY CORP. for NT$534 million in H1 2024[164] - Key management personnel compensation for H1 2024 was NT$879 million, a decrease from H1 2023[167] 9. Significant Contingencies and Unrecognized Contract Commitments The company has NT$20.8 billion in unrecognized construction commitments, and the Micron Technology trade secret case is globally settled - Unrecognized construction contract commitments for operational expansion totaled approximately NT$20.8 billion as of June 30, 2024[171] - The trade secret litigation with Micron Technology is fully resolved, with UMC completing its probation and sentence termination on January 27, 2024[172] 12. Others (Financial Risk Management) This section outlines financial risk management, including market, credit, and liquidity risks, with sensitivity analysis and debt-to-capital ratio details - The debt-to-capital ratio increased to 23.47% by June 30, 2024, up from 15.72% at year-end 2023[232] - A 10% NTD appreciation against the USD would decrease H1 2024 profit by NT$783 million[185] - A 5% change in listed financial asset prices would impact H1 2024 profit by NT$261 million[189] 14. Operating Segment Information The company operates as a single reportable segment, wafer fabrication, with no material accounting policy differences from consolidated statements - UMC operates as a single reportable segment: wafer fabrication[237] Attachments Attachment 11: Investment in Mainland China Accumulated investment in Mainland China reached NT$60.4 billion (USD 1.87 billion) by June 2024, below the MOEA-set upper limit Investment in Mainland China (as of June 30, 2024) | Description | Amount (in thousands of NTD) | | :--- | :--- | | Accumulated Investment | $60,415,446 | | Investment Amount Authorized by MOEA | $91,227,153 | | Upper Limit on Investment | $213,467,627 | - Hejian Technology's Board approved the disposal of its 100% interest in UNITEDDS SEMICONDUCTOR (SHANDONG) CO., LTD. on April 2, 2024[279]