United Microelectronics Corporation

UMC reported 3Q26 consolidated revenue of TWD 74.24 billion, up 8% sequentially and 16.1% year over year. Gross margin was 34%, improving from 32.5% in the prior quarter. Net income attributable to shareholders of the parent was TWD 16.43 billion, with EPS of TWD 1.32 and ADS EPS of $0.206. Wafer shipments increased 7.3% to more than 1.2 million 12-inch equivalent wafers, and capacity utilization rose to 92% from 85% in the previous quarter. For the first nine months of 2026, revenue was TWD 204 billion, gross profit was TWD 65.3 billion, net income attributable to shareholders of the parent was TWD 74.86 billion, and EPS was TWD 6 in NT dollar terms or $0.945 per ADS. On the balance sheet, total equity was TWD 470 billion and cash was about TWD 142 billion as of September 30. For 4Q26, management expects wafer shipments to increase by low single digits, ASP to remain firm, gross margin to be comparable with 3Q26, and utilization to remain in the low 90% range. 2026 cash-based CapEx remains $2 billion.

Jason Wang said 3Q26 reflected healthy demand across all segments, record wafer shipments, and strong performance in 22/28nm, with 22nm revenue reaching 18.3% of wafer sales. He emphasized that AI-related demand, especially in silicon photonics and advanced packaging, is becoming a new growth engine and said UMC is accelerating selected investments to meet customer-backed demand. His tone was confident and more upbeat on 2027, framing growth as increasingly value-driven rather than just volume-driven.

Chitung Liu focused on the quarter’s financial performance and balance sheet, highlighting revenue of TWD 74.24 billion, gross margin of 34%, net income of TWD 16.43 billion, and utilization of 92%. He noted cash of about TWD 142 billion and total equity of TWD 470 billion at quarter-end. On outlook, he said 2026 cash-based CapEx stays at $2 billion, while depreciation will be higher in 2027 and 2028 and raw material costs are also a headwind, which could pressure gross margin even though EBITDA margin should remain healthy.

Analysts pressed management on 2027 demand, pricing, CapEx, and whether AI-related supply could become oversupplied. Management said 2027 growth should continue, but shipment growth will be constrained by capacity, and confirmed a roughly 10% year-over-year blended ASP increase for 2027, driven by both pricing improvement and richer product mix. They also said AI-related revenue is close to $300 million in 2026 and could exceed a quarter of UMC revenue in three years, while stressing that the company is building capacity in phases and tied to customer commitments. On profitability, management said higher ASPs and utilization help, but depreciation and raw-material inflation will weigh on gross margin in the next two years.