Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Equity Bottom-Up

United Microelectron Sp Adr / Equity Bottom-Up

<ul>
<li>UMC's latest results indicate a mild recovery for consumer, communications, and computing industries. UMC's capacity utilization to continue improving but industry inventory correction could last until end-2024E.</li>
<li>UMC maintained 2024E capex guidance however it's increasingly clear UMC can't keep up the capex arms race alone. Hence we see UMC &amp; Intel becoming closer and closer partners.</li>
<li>We continue to view UMC as a long-term accumulate, and rate the stock as Structural Long, this however requires a longer than usual multi-year holding period.</li>
</ul>


UMC's latest results indicate a mild recovery for consumer, communications, and computing industries. UMC's capacity utilization to continue improving but industry inventory correction could last until end-2024E.
UMC maintained 2024E capex guidance however it's increasingly clear UMC can't keep up the capex arms race alone. Hence we see UMC &amp; Intel becoming closer and closer partners.
We continue to view UMC as a long-term accumulate, and rate the stock as Structural Long, this however requires a longer than usual multi-year holding period.


UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important

Taiwan Tech Focused Senior Analyst

Patrick Liao

<ul>
<li>3Q24 guidance: Shipment up mid-single digits QoQ; ASP: Remains firm in USD; GM: around mid-30%. (Consensuses were high single digits.)</li>
<li>Has provided a 22nm HV solution for high-end OLED DDI to high-end SP, and expects to reach high-volume production in 2025.  </li>
<li>Cooperation with <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel Corp (INTC US)</a> is progressing well, targeting MP for 14nm in 2027.</li>
</ul>


3Q24 guidance: Shipment up mid-single digits QoQ; ASP: Remains firm in USD; GM: around mid-30%. (Consensuses were high single digits.)
Has provided a 22nm HV solution for high-end OLED DDI to high-end SP, and expects to reach high-volume production in 2025.  
Cooperation with Intel Corp (INTC US) is progressing well, targeting MP for 14nm in 2027.


UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses

United Microelectronics Corp / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/united-microelectron-sp-adr" target="_blank" data-smartkarma-citation="entities:11540:1" rel="noopener">United Microelectron Sp Adr (UMC US)</a> 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.</li>
<li>We estimate that UMC's overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.</li>
<li>UMC is benefiting from Novatek shipping OLED DDIC to <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple (AAPL US)</a> in 3Q24.</li>
</ul>



United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
We estimate that UMC's overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.


UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a>'s 2Q24F outlook is experiencing a slight upward now, possibly indicating a positive QoQ.  </li>
<li>UMC's notable contributors are showing a mixed outlook, and <a href="https://www.smartkarma.com/entities/novatek-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:10904:1" rel="noopener">Novatek Microelectronics Corp (3034 TT)</a> could be the most influencer.</li>
<li>Attention should be paid to the 3Q24F outlook for any potential changes and a shift from a bearish view could positively impact the outlook, potentially signaling the end of downturn.  </li>
</ul>



United Microelectronics Corp (2303 TT)'s 2Q24F outlook is experiencing a slight upward now, possibly indicating a positive QoQ.  
UMC's notable contributors are showing a mixed outlook, and Novatek Microelectronics Corp (3034 TT) could be the most influencer.
Attention should be paid to the 3Q24F outlook for any potential changes and a shift from a bearish view could positively impact the outlook, potentially signaling the end of downturn.  


UMC (2303.TT; UMC.US): Some Rush Orders Coming in and 2Q24F Could Post Positive QoQ.

<ul>
<li>The results for 1Q24F should remain unchanged, even though we anticipate a slight upside.  </li>
<li>UMC's outlook for 2Q24F is deteriorating, with a likely decline 5-10% QoQ.</li>
<li>The demand from UMC's clients is not improving in 2Q24F.</li>
</ul>


The results for 1Q24F should remain unchanged, even though we anticipate a slight upside.  
UMC's outlook for 2Q24F is deteriorating, with a likely decline 5-10% QoQ.
The demand from UMC's clients is not improving in 2Q24F.


UMC (2303.TT; UMC.US): Current 2Q24F Outlook Is Downside 5-10% QoQ.

Taiwan

United Microelectronics Corporation designs, manufactures, and markets integrated circuits (ICs) and related electronic products.  The Company's main products are consumer electronic ICs, memory ICs, personal computer peripheral ICs, and communication ICs.

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United Microelectronics Corp (2303 TT)

UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important

UMC sees mild industry end demand improvement, but inventory correction may last until end-2024E. UMC and Intel's partnership will deepen over...

Vincent Fernando, CFA

UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses

Overall, sales are lower than consensuses in 3Q24. UMC plans to reach high-volume production for 22nm HV solution by 2025 and is progressing well...

Patrick Liao

UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

UMC's 3rd quarter outlook shows a slight upside, with estimated overall utilization at 65-70% and benefits from Novatek shipping OLED DDIC to Apple.

Patrick Liao

UMC (2303.TT; UMC.US): Some Rush Orders Coming in and 2Q24F Could Post Positive QoQ.

UMC's 2Q24F outlook is slightly improving, with Novatek Microelectronics Corp potentially being a key influencer. Keep an eye on the 3Q24F outlook...

Patrick Liao

UMC (2303.TT; UMC.US): Current 2Q24F Outlook Is Downside 5-10% QoQ.

UMC's 1Q24F results expected to hold steady, while 2Q24F outlook shows declining demand and potential 5-10% decrease. The demand from UMC's...

Patrick Liao

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UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important

​UMC sees mild industry end demand improvement, but inventory correction may last until end-2024E. UMC and Intel's partnership will deepen over...

Vincent Fernando, CFA

UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses

Overall, sales are lower than consensuses in 3Q24. UMC plans to reach high-volume production for 22nm HV solution by 2025 and is progressing well...

Patrick Liao

UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

​UMC's 3rd quarter outlook shows a slight upside, with estimated overall utilization at 65-70% and benefits from Novatek shipping OLED DDIC to Apple.

Patrick Liao

UMC (2303.TT; UMC.US): Some Rush Orders Coming in and 2Q24F Could Post Positive QoQ.

​UMC's 2Q24F outlook is slightly improving, with Novatek Microelectronics Corp potentially being a key influencer. Keep an eye on the 3Q24F outlook...

Patrick Liao

UMC (2303.TT; UMC.US): Current 2Q24F Outlook Is Downside 5-10% QoQ.

​UMC's 1Q24F results expected to hold steady, while 2Q24F outlook shows declining demand and potential 5-10% decrease. The demand from UMC's...

Patrick Liao

UMC sees mild industry end demand improvement, but inventory correction may last until end-2024E. UMC and Intel's partnership will deepen over...

UMC's 3rd quarter outlook shows a slight upside, with estimated overall utilization at 65-70% and benefits from Novatek shipping OLED DDIC to Apple.

UMC's 2Q24F outlook is slightly improving, with Novatek Microelectronics Corp potentially being a key influencer. Keep an eye on the 3Q24F outlook...

UMC's 1Q24F results expected to hold steady, while 2Q24F outlook shows declining demand and potential 5-10% decrease. The demand from UMC's...