Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

United Microelectron Sp Adr / Equity Bottom-Up

<ul>
<li>4Q24 Sales forecast: Shipment: flat QoQ; ASP: Remains flat in USD; NTD appreciation may lead to decline for 4Q24 sales.</li>
<li>Higher depreciation costs and NTD appreciation will negatively impact GM in 4Q24 and going forward.</li>
<li>UMC is the OLED DDI market leader, and believes this position will remain. 22nm OLED DDI is still the mainstream in the next 2-3 years.</li>
</ul>


4Q24 Sales forecast: Shipment: flat QoQ; ASP: Remains flat in USD; NTD appreciation may lead to decline for 4Q24 sales.
Higher depreciation costs and NTD appreciation will negatively impact GM in 4Q24 and going forward.
UMC is the OLED DDI market leader, and believes this position will remain. 22nm OLED DDI is still the mainstream in the next 2-3 years.


UMC (2303.TT; UMC.US): 4Q24 Sales Might Reduce; GM Is Down Due to Inflation and Electricity Costs.

<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)'s </a>outlook for 4Q24 is expected to show a decrease of around -5% QoQ, with a minimum gross margin of 30%.</li>
<li>
<a href="https://www.smartkarma.com/entities/qualcomm-inc" target="_blank" data-smartkarma-citation="entities:969:1" rel="noopener">Qualcomm Inc (QCOM US)</a> moving out of <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing International Corp (SMIC) (981 HK)</a> and has opened up opportunities for UMC.  </li>
<li>UMC is considering selling its 8" Fab, known as 8S, due to its consistently poor performance.  </li>
</ul>



United Microelectron Sp Adr (UMC US)'s outlook for 4Q24 is expected to show a decrease of around -5% QoQ, with a minimum gross margin of 30%.

Qualcomm Inc (QCOM US) moving out of Semiconductor Manufacturing International Corp (SMIC) (981 HK) and has opened up opportunities for UMC.  
UMC is considering selling its 8" Fab, known as 8S, due to its consistently poor performance.  


UMC (2303.TT; UMC.US): 4Q24 Outlook Blurred; QCOM Opens up a New Chance; Considering Selling Fab 8S.

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

<ul>
<li>Given UMC's partnership with Intel to produce chips using Intel's 12nm fab capacity, we believe latest Intel developments increase the opportunity for Intel Foundry to take a stake in UMC.</li>
<li>Intel's Foundry business makes a strong partner for UMC who has deep foundry experience and talent, but doesn't have leading edge fabs nor the balance sheet to build them.</li>
<li>If Intel Foundry Services spins out or Intel strengthens its balance sheet through a deal with Qualcomm/Apollo, the potential for a deeper UMC-Intel Foundry partnership becomes even more compelling.</li>
</ul>


Given UMC's partnership with Intel to produce chips using Intel's 12nm fab capacity, we believe latest Intel developments increase the opportunity for Intel Foundry to take a stake in UMC.
Intel's Foundry business makes a strong partner for UMC who has deep foundry experience and talent, but doesn't have leading edge fabs nor the balance sheet to build them.
If Intel Foundry Services spins out or Intel strengthens its balance sheet through a deal with Qualcomm/Apollo, the potential for a deeper UMC-Intel Foundry partnership becomes even more compelling.


United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

United Microelectronics Corp / Equity Bottom-Up

<ul>
<li>The outlook for 4Q24 appears somewhat bearish at the moment, though it has not been fully defined before the end of October.</li>
<li>Taiwanese companies such as MediaTek Inc (2454 TT), Novatek Microelectronics Corp (3034 TT) and Realtek Semiconductor (2379 TT) continue to be the main drivers of demand for UMC.</li>
<li>On a positive note, there are warnings against overly relying on chips from Chinese manufacturers due to US sanctions.</li>
</ul>


The outlook for 4Q24 appears somewhat bearish at the moment, though it has not been fully defined before the end of October.
Taiwanese companies such as MediaTek Inc (2454 TT), Novatek Microelectronics Corp (3034 TT) and Realtek Semiconductor (2379 TT) continue to be the main drivers of demand for UMC.
On a positive note, there are warnings against overly relying on chips from Chinese manufacturers due to US sanctions.


UMC (2303.TT; UMC US): The Outlook for 4Q24 Is Somewhat Bearish.

<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.

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 (2303.TT; UMC.US): 4Q24 Sales Might Reduce; GM Is Down Due to Inflation and Electricity Costs.

4Q24 sales forecast for UMC predicts flat shipment and ASP, with potential decline due to NTD appreciation. Higher depreciation costs and NTD...

Patrick Liao

UMC (2303.TT; UMC.US): 4Q24 Outlook Blurred; QCOM Opens up a New Chance; Considering Selling Fab 8S.

UMC's 4Q24 outlook expects -5% QoQ decrease with 30% gross margin, Qualcomm moving out of SMIC opens opportunities for UMC, considering selling...

Patrick Liao

United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

UMC's partnership with Intel could lead to Intel Foundry taking a stake in UMC due to Intel's latest developments and UMC's foundry experience.

Vincent Fernando, CFA

UMC (2303.TT; UMC US): The Outlook for 4Q24 Is Somewhat Bearish.

4Q24 outlook is bearish, MediaTek, Novatek and Realtek continue to be the main drivers of demand for UMC, caution against Chinese chips due to US...

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

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52-week Range

Market Cap (USDm)

P/E

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UMC (2303.TT; UMC.US): 4Q24 Sales Might Reduce; GM Is Down Due to Inflation and Electricity Costs.

​4Q24 sales forecast for UMC predicts flat shipment and ASP, with potential decline due to NTD appreciation. Higher depreciation costs and NTD...

Patrick Liao

UMC (2303.TT; UMC.US): 4Q24 Outlook Blurred; QCOM Opens up a New Chance; Considering Selling Fab 8S.

​UMC's 4Q24 outlook expects -5% QoQ decrease with 30% gross margin, Qualcomm moving out of SMIC opens opportunities for UMC, considering selling...

Patrick Liao

United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

​UMC's partnership with Intel could lead to Intel Foundry taking a stake in UMC due to Intel's latest developments and UMC's foundry experience.

Vincent Fernando, CFA

UMC (2303.TT; UMC US): The Outlook for 4Q24 Is Somewhat Bearish.

​4Q24 outlook is bearish, MediaTek, Novatek and Realtek continue to be the main drivers of demand for UMC, caution against Chinese chips due to US...

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

4Q24 sales forecast for UMC predicts flat shipment and ASP, with potential decline due to NTD appreciation. Higher depreciation costs and NTD...

UMC's 4Q24 outlook expects -5% QoQ decrease with 30% gross margin, Qualcomm moving out of SMIC opens opportunities for UMC, considering selling...

UMC's partnership with Intel could lead to Intel Foundry taking a stake in UMC due to Intel's latest developments and UMC's foundry experience.

4Q24 outlook is bearish, MediaTek, Novatek and Realtek continue to be the main drivers of demand for UMC, caution against Chinese chips due to US...

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