United Microelectronics Q1 Earnings Call Highlights

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United Microelectronics (NYSE:UMC) reported first-quarter 2026 results that management said showed growth versus both the prior quarter and the year-ago period, while also outlining expectations for stronger second-quarter shipments and a potential wafer price adjustment in the second half of 2026.

First-quarter results and drivers

CFO Chitung Liu said consolidated revenue in the first quarter was TWD 61.04 billion and gross margin was 29.2%. Net income attributable to shareholders of the parent was TWD 16.17 billion, with earnings per ordinary share of TWD 1.29 (and TWD 0.204 per ADS).

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On a sequential basis, Liu said revenue was “basically flat or down 1.2%” to TWD 61.4 billion and gross margin declined to 29.2% from 30.7%. Net income rose 50% sequentially, which he attributed in part to non-operating income that increased to TWD 5.3 billion, citing “the strength of the stock market performance.”

Year over year, Liu said revenue increased 5.5%, “mainly due to shipment increase,” and gross margin improved by 2.5 percentage points. He also cited net income growth versus TWD 7.7 billion in the first quarter of last year.

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On the balance sheet, Liu highlighted total equity of TWD 406 billion and said cash on hand remained “over TWD 100 billion” at the end of the quarter.

Utilization, product mix, and technology trends

Liu said wafer shipments increased 2.7% sequentially, driven by “relatively strong growth in the consumer segment,” which lifted utilization to 79%. He added that blended average selling price declined slightly, primarily due to “better-than-expected 8-inch wafer shipment,” which lowered the blended ASP.

On end-market mix, UMC indicated communication represented 39% of first-quarter revenue, down 3 percentage points quarter over quarter, while consumer rose 4 percentage points to 32%. Liu also pointed to an IDM revenue contribution decline to 14% from 20% in the prior quarter.

On technology mix, Liu said revenue below 40nm remained above 50% of total shipment, and 28nm/22nm was about 34%, “slightly declined” from the previous quarter. He also said demand for 22nm logic and specialty process continued to gain momentum, with 22nm revenue reaching another record high and accounting for about 14% of first-quarter revenue.

Looking ahead, Liu said that by the end of the year, “over 50 customers will have complete tape-out on our 22nm platform,” spanning applications including display driver IC, network chips, and microcontrollers.

Liu noted that first-quarter capacity was modestly impacted by annual maintenance, and said total available capacity is expected to return to the prior level in the second quarter. He also reiterated that the company’s capital spending plan “for the time being” remained around $1.5 billion.

Second-quarter guidance and market conditions

For the second quarter of 2026, Liu guided to:

Wafer shipments up by a high single-digit percentage

ASP up by a low single-digit percentage in U.S. dollar terms

Gross margin of approximately 30%

Utilization in the low 80% range

Liu said the company expects “strong wafer shipment growth across both 8-inch and 12-inch portfolios,” supported by a rebound in communication and “healthy demand across computer, consumer, and industrial markets.” He also flagged headwinds from “the current memory supply shortage and ongoing conflict in the Middle East,” which he said were creating “certain headwinds and market volatilities,” though UMC still foresaw “resilient market demand.”

Pricing actions and margin discussion

During Q&A, Liu said UMC had “recently sent out a letter to our customers” regarding a price increase expected in the second half of 2026. He said the low single-digit ASP increase implied in second-quarter guidance was “mainly from the mix improvement,” pointing to 22nm and 28nm as key contributors.

Liu said the company’s pricing adjustment was tied to its investment needs and cost pressures, citing “increasing key cost drivers, including raw materials, energy and logistics.” He added that the adjustment would be implemented “in a very disciplined and sustainable manner,” and would depend on factors such as “product mix, strategy, capacity agreement, and also the long-term partnership.” Liu also said UMC’s pricing outlook was “slightly better than the previous quarter” in light of the pricing letter.

On margins, Liu said utilization-driven uplift could be offset by cost headwinds. “Unfortunately, we’re still in the peak of our depreciation increase cycle,” he said, adding that the depreciation curve was expected to peak starting next year. He also pointed to rising raw material, energy, and logistics costs and said that for the remainder of 2026, the Singapore 12-inch ramp in the second half would “continue to carry higher depreciation expenses over the next several quarters.”

Advanced packaging, silicon photonics, and Intel collaboration

Senior Director of Finance Michael Lin and IR Manager David Wong addressed questions about emerging businesses and UMC’s collaboration with Intel.

On advanced packaging, Wong said UMC was working with “more than 10 customers” and expected “more than 35 new tape outs in 2026.” He added that UMC was in production with a “bridge die solution and discrete DTC (Deep Trench Capacitor),” with additional products expected to ramp. Wong said capacity planning for new businesses would be aligned with customer demand and market outlook.

On silicon photonics, Wong said UMC was working with “industry-leading customers” and that preliminary data showed performance “on par or better than our peers,” which he attributed to manufacturing and “fully automated benches equipment.” He said UMC was on track to deliver PDK 1.0 in 2027 based on an IMEC license, and was evaluating integration approaches including hybrid bonding, TSV, and chiplet integration. In a later exchange, Wong said current designs under engagement were mainly “pluggable solutions” for PICs, while the company was also preparing for longer-term CPO-related integration needs.

Regarding UMC’s 12nm project with Intel, Liu said the company was planning to see “initial commercial production” by “later 2027,” and noted investment was underway and reflected in increased R&D expenses. Lin said the project “continue[s] to go well,” with UMC on schedule to deliver the PDK and associated IP to customers in 2026, and that product tape-outs were expected to begin in 2027. Lin said targeted applications for the 12nm project included DTV, Wi-Fi connectivity, and high-speed interface products.

When asked about further collaboration with Intel beyond 12nm, Liu said UMC’s focus was to “deliver the 12nm platform to customers,” adding the company could consider extensions in the future if they made sense, but “for the time being, the only focus is on 12nm platform.”

About United Microelectronics (NYSE:UMC)

United Microelectronics Corporation (UMC) is a Taiwan-based semiconductor foundry that provides wafer fabrication and related manufacturing services to a global customer base. Founded in 1980, the company operates as a pure-play foundry, producing integrated circuits for a range of customers including fabless semiconductor companies and integrated device manufacturers. UMC is publicly listed (NYSE: UMC) and focuses on high-reliability manufacturing rather than branding consumer products.

UMC's core services encompass wafer fabrication using a portfolio of process technologies, with particular emphasis on mature and specialty nodes that support analog, power-management, radio-frequency (RF), and mixed-signal applications.