UMC(US:UMC)2022-10-26 18:27Financial Data and Key Metrics Changes - In Q3 2022, consolidated revenue was TWD 75.39 billion, with a gross margin of 47.3% and net income attributable to shareholders of TWD 27 billion, resulting in earnings per share (EPS) of TWD 2.19, a significant increase from TWD 1.74 in the previous quarter [6][7] - Revenue grew by 4.6% sequentially, and the gross margin rate was 47%, translating to TWD 35.66 billion in absolute terms [6][7] - For the first three quarters of 2022, cumulative revenue increased by 37%, with a gross margin rate of approximately 45.8% [7][8] Business Line Data and Key Metrics Changes - The revenue percentage from the Asian market declined from 55% in the previous quarter to 52% in Q3 2022, while the IDM segment outperformed fabless, contributing about 17% of total revenue [8][9] - The 22/20 nanometer segment reached 25% of total revenue for the first time, driven by increased capacity from the P5 facility [9] Market Data and Key Metrics Changes - The automotive segment showed continuous double-digit growth, while consumer segments like PC and smartphone experienced prolonged inventory corrections [30][31] - The overall wafer shipment and average selling price (ASP) remained stable, with ASP expected to stay flat in Q4 2022 [10][12] Company Strategy and Development Direction - The company revised its 2022 capital expenditures down to USD 3 billion, focusing on capacity expansion in Tainan and Singapore to meet long-term supply commitments [12][13] - UMC aims to strengthen its position in the automotive and industrial segments while continuing to innovate in technology to capture growth opportunities in 5G, AIoT, and other markets [10][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds from demand weakness due to inflation and geopolitical factors, indicating that the semiconductor industry is expected to decline in 2023 [11][19] - Despite the challenges, UMC remains committed to its long-term growth strategy, focusing on technology differentiation and maintaining strong customer relationships [12][36] Other Important Information - The company plans to maintain its cash dividend policy, having paid out TWD 3 per share in Q3 2022, with cash on hand around TWD 180 billion post-dividend [8] - UMC is closely monitoring geopolitical risks and U.S. export controls, which have had limited impact on its operations so far [39][40] Q&A Session Summary Question: Outlook for Q4 and inventory correction - Management indicated that the consumer segment, particularly PC and smartphone, is undergoing a prolonged inventory correction, while the automotive segment remains stable [16][17] Question: CapEx reduction implications - The reduction in CapEx from USD 3.6 billion to USD 3 billion was due to equipment delays and a need to reprioritize projects amid market downturns [23][24] Question: Pricing strategy during downturn - Management emphasized that pricing strategies will reflect technology leadership and long-term partnerships, with limited changes expected unless significant market benefits arise [36][37] Question: Geopolitical risks and market share - UMC is monitoring geopolitical developments closely, with limited immediate impact on order flows, but remains open to potential opportunities arising from market shifts [39][40] Question: Automotive and industrial segment stability - The automotive segment is expected to remain stable, with ongoing collaboration with both IDM and fabless customers to expand business [42] Question: LTA commitments and capacity adjustments - Management confirmed that LTA commitments remain strong, and adjustments will be made to align with market conditions while fulfilling obligations [45][51]