UMC(US:UMC)2023-01-16 18:31Financial Data and Key Metrics Changes - In Q4 2022, consolidated revenue was TWD 67.84 billion, with a gross margin rate of 42.9% and net income attributable to shareholders of TWD 19 billion, resulting in earnings per share (EPS) of TWD 1.54 [6][10] - Revenue declined by 10% sequentially from the previous quarter, while total operating income decreased by approximately 20% to TWD 23.6 billion [6][10] - For the full year 2022, total revenue grew by 31% to TWD 278.7 billion, and operating income more than doubled to TWD 104 billion, with EPS increasing to TWD 7.09 from TWD 4.57 in the previous year [7][10] Business Line Data and Key Metrics Changes - The revenue breakdown showed that the North American market represented about 30% of total revenue, up from 23% in the previous quarter, while the Asian market saw a decline from 52% to 54% [7][10] - The communication segment remained the largest, accounting for 45% of total revenue, while the automotive segment grew by 82% year-over-year, now representing approximately 9% of total sales [8][12] Market Data and Key Metrics Changes - The quarterly breakdown indicated that IDM (Integrated Device Manufacturer) accounted for 19% and Fabless for 81% of revenue, with IDM remaining at about 15% for the full year [8] - The technology breakdown for Q4 showed that 22/28 nanometer technology represented 28% of revenue, while 40 nanometer accounted for about 17% [8] Company Strategy and Development Direction - The company is focusing on enhancing its specialty technology offerings and improving profitability through strategic customer relationships, particularly in the automotive segment [11][12] - UMC plans to implement strict cost control measures and defer certain capital expenditures in response to the soft global economic outlook for 2023 [13] Management's Comments on Operating Environment and Future Outlook - Management expects the current challenging environment to persist through Q1 2023, with wafer shipments projected to decline by high teens percentage range and capacity utilization at approximately 70% [14] - The company remains optimistic about long-term demand driven by digital transformation across industries, despite short-term inventory corrections [13][14] Other Important Information - The company has a cash-based CapEx budget of $3 billion for 2023, with 90% allocated to 12-inch related expansions [9] - The company is also experiencing a minor decline in available capacity due to maintenance but expects to return to normal levels by Q2 2023 [9] Q&A Session Summary Question: Discussion on the business cycle and inventory correction - Management indicated that they are still in the midst of an inventory correction, with some improvement expected in certain segments by the second half of 2023 [16][17] Question: Pricing strategy and customer negotiations - Management stated that pricing adjustments will have limited effects on demand creation, and they intend to maintain firm pricing while supporting customer competitiveness [20][21] Question: 2023 outlook and CapEx details - Management projected a low single-digit decline for the semiconductor industry in 2023, with a CapEx budget primarily focused on new capacity expansion and product mix upgrades [31][32] Question: 28-nanometer technology utilization - Management expects 28-nanometer utilization to hold up slightly better than the overall corporate average, despite a general decline in capacity utilization [29][30] Question: Geopolitical developments and supply chain diversification - Management acknowledged trends in supply chain diversification but noted that significant engagement and order opportunities may not materialize until after 2023 [65][68]