UMC(US:UMC)2021-10-27 14:05Financial Data and Key Metrics Changes - In Q3 2021, consolidated revenue was NT$ 55.91 billion with a gross margin of 36.8% and net income attributable to shareholders of NT$ 17.46 billion, resulting in an earnings per share (EPS) of NT$ 1.43 [7][8] - Revenue grew by 9.8% quarter-over-quarter, while gross margin increased to 36.8% from the previous quarter [7][8] - For the first three quarters of 2021, revenue increased by 17% to NT$ 153.9 billion, driven by higher wafer shipments and improved average selling prices (ASP) [8][9] Business Line Data and Key Metrics Changes - Overall wafer shipments grew by 2.6% quarter-over-quarter to 2.5 million 8-inch equivalent wafers [12] - Revenue from 28-nanometer technologies continued to rise, with 28-nanometer contributing significantly to revenue growth [12][14] - The company reported that communication accounted for approximately 46% of total revenue, while consumer and computer segments contributed 27% and 17%, respectively [10] Market Data and Key Metrics Changes - Asia represented about 55% of total revenue, with Japan, Europe, and the U.S. remaining relatively stable compared to the previous quarter [9][10] - The company noted that it is operating at nearly full capacity across its facilities, indicating strong demand across all markets [10][12] Company Strategy and Development Direction - The company aims to strengthen customer relationships and enhance technology competitiveness, focusing on expanding its logic and specialty technology portfolio [14] - UMC is committed to achieving net-zero carbon emissions by 2050 and is actively working with suppliers to build a low-carbon supply chain [15] - The company plans to maintain a disciplined capital expenditure approach, with a budget of US$ 2.3 billion for 2021, primarily for capacity expansion [11][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued robust demand for chips across computing, consumer, and communication segments, with expectations for wafer shipments and ASP trends to remain firm [12][14] - The company anticipates that gross margins will continue to exhibit upward momentum due to optimized capacity and product mix [13][14] - Management acknowledged some mild corrections in specific market segments but emphasized that overall demand remains strong [48] Other Important Information - The company received the Green Chemistry Application and Innovation Award from Taiwan's Environmental Protection Agency, recognizing its efforts in environmental sustainability [14] - UMC's current cash on hand is approximately NT$ 113 billion after cash dividend payouts, with total equity around NT$ 257 billion [9] Q&A Session Summary Question: Capacity expansion timing for Phase 5 and Phase 6 - Phase 5, 10K expansion for 28-nanometer will be online in Q2 2022, while Phase 6 will come online later in 2023 [18] Question: Sustainability of operating above 100% capacity - The company expects to maintain productivity improvements and operate at above 100% capacity if demand persists [20][21] Question: Pricing outlook for 2022 - ASP momentum is expected to continue into 2022, with a focus on long-term partnerships rather than short-term profits [26] Question: Gross margin expectations - Management anticipates continued gross margin expansion, with a balance between profit and long-term growth [30][32] Question: Demand trends and inventory levels - Despite some mild corrections in specific segments, overall demand remains strong, and inventory levels are not a significant concern [48] Question: Legal issues and provisions - The company cannot comment on ongoing litigation but is monitoring the situation closely [56] Question: Competitive positioning against peers - UMC is confident in its ability to outpace foundry industry growth, driven by structural demand from 5G, IoT, and other megatrends [58][59]