United Microelectronic Corp. 2026 Q3 Earnings Call

Mr. Lin, please begin. Thank you, and welcome to UMC's conference call for the third quarter of 2026.

I am joined by Mr. Jason Wang, CEO of UMC, and Mr. Chi-Tung Liu, the CFO of UMC. In a moment, we will hear our CFO present the third quarter financial results, followed by our CEO's key message to address UMC's focus and fourth quarter 2026 guidance. Once our CEO and CFO complete their remarks, there will be a Q&A session. UMC's quarterly financial reports are available at our website www.umc.com under the Investors Financials section. During this conference, we may make forward-looking statements based on management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including the risks that may be beyond the company's control.

For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC and the ROC security authorities. During this conference, you may view our financial presentation material, which is being broadcast live through the internet. Now, I would like to introduce UMC's CFO, Mr. Chi-Tung Liu, to discuss UMC's third quarter 2026 financial results.

Thank you, Michael. I would like to go through the third quarter 2026 investor conference presentation material, which can be downloaded for view in real time from our website. Starting on page 4, the third quarter of 2026, consolidated revenue was NT$74.24 billion, with gross margin rate 34%. Net income attributable to the shareholder of the parent was NT$16.43 billion, and the earnings per ordinary share were NT$1.32. Capacity utilization rate in the third quarter reached 92%, compared to 85% in the previous quarter. Overall, EPS for the quarter was NT$1.32. On page 5, revenue grew 8% sequentially to reach NT$74.2 billion. As we stated earlier, gross margin rate also improved from 32.5% in the previous quarter to 34% in this quarter for NT$25.2 billion. EPS per U.S. ADS is $0.206. For the year-over-year comparison on page 6, revenue grew 16.1% to NT$204 billion.

Gross profit also grew 30.8% year-over-year to TWD 65.3 billion or 32% of the gross margin rate. With the help of the non-operating income, overall net income attributable to the shareholder of the parent grew 136.5% year-over-year to reach NT$74.86 billion for the first nine months of the year. EPS for the first three quarters reached TWD 6 in NT dollar terms, or $4.945 per ADS in US dollar term. On page seven, our balance sheet at the end of third quarter, total equity is NT$470 billion, with cash account for about TWD 142 billion on September 30th. For EPS, sorry. For blended ASP in the third quarter was relatively stable, remained firm compared to the previous quarter on page eight. For revenue breakdown on page nine, there's very little change for quarter 2 compared to quarter 3 of 2026 for revenue breakdown by geography.

On page 10, our revenue breakdown by customer type also remained virtually unchanged. For IDM, it was about 14% of the total revenue, and fabless account for the others. For revenue breakdown by application Consumer stay unchanged at around 32%, when communication and computer also stay quarter-over-quarter unchanged. On page 12, our 22 and 28 nanometer revenue still account for more than one third, reach about 35% of the total pie chart, and 40 nanometer is around 16%, and 65nm is about 19%. Our quarterly capacity continue to increase slightly, mainly coming from our Fab 12i facility in Singapore. For quarter 4 of 2026, we expect the capacity for overall UMC reach about 1.33 million 12-inch-equivalent, 1.33 million for 12-inch-equivalent capacity by Q4 2026. Capacity compared to the last quarter's estimate still remain unchanged around $2 billion.

The above is the summary of UMC result for third quarter 2026. More details are available in the report, which has been posted on our website. I will now turn the call over to CEO of UMC, Mr. Jason Wang.

Thank you, Qidong. Good evening, everyone. Here, I would like to share UMC's third quarter results. In the third quarter, we saw a healthy demand across all market segments, driving a 7.3% growth in wafer shipments to more than 1.2 million 12-inch-equivalent wafers, a record high. Our overall fab utilization rate reached 92%, with several of our 12-inch fabs operating at full capacity, while 8-inch operations also saw a strong recovery. By technology node, our 22/28 nanometer business had another record-breaking quarter, with 22 nanometer revenue now accounting for 18.3% of wafer sales. As the customers continue to tape out new products, including display drivers, automotive radar, and Wi-Fi ICs. In new business area, active customer engagements for advanced packaging and silicon photonics remain robust. We expect this engagement to translate into accretive growth over the coming quarters as we ramp existing projects and support new product tape-outs.

Looking ahead to the fourth quarter, we expect the positive demand momentum to sustain, supporting stable shipments and utilization rates. Revenue from our specialty technology portfolio will continue to grow sequentially, driven in part by the ramp-ups of our advanced packaging and silicon photonics businesses. We have seen a significant increase in demand for these new business areas, and we are in the process of converting some existing capacity to address near-term unfulfilled demand. In the longer run, our two-track expansion plan in Singapore and Tainan will be crucial to ensure UMC's capacity growth can keep pace with our customers' needs. We are pleased to announce our board of directors today approved an additional capital expenditure budget of approximately US$3.2 billion, which will enable us to accelerate our expansion schedule as we continue to align with customers on their product roadmap and requirements.

Now let's move on to fourth quarter 2026 guidance. Our wafer shipment will increase by low single digits. ASP in US dollar will remain firm. Gross margin will be comparable to the preceding quarter. Capacity utilization rate will be in the low 90% range. Our 2026 cash-based CapEx budget will be at US$2 billion. That concludes my comments. Thank you all for your attention. Now we are ready for questions.