Full-year foundry revenue in USD increased 7%YoY
Fourth Quarter 2017 Overview1:
- Revenue: NT$36.63 billion (US$1.23 billion)
- Gross margin: 17.2%
- Foundry revenue from 28nm: 15%; Foundry operating margin: 5.4%
- Foundry capacity utilization rate: 90%
- Net income attributable to stockholders of the parent: NT$1.77 billion (US$59 million)
- Earnings per share: NT$0.15; earnings per ADS: US$0.025
TAIPEI, Taiwan--(BUSINESS WIRE)--United Microelectronics Corporation (NYSE:UMC; TWSE:2303) (“UMC” or “The Company”), a leading global semiconductor foundry, today announced its consolidated operating results for the fourth quarter of 2017.
Fourth quarter consolidated revenue was NT$36.63 billion, down 2.8% from NT$37.70 billion in 3Q17 and decreased 4.4% YoY from NT$38.31 billion in 4Q16. The consolidated gross margin in 4Q17 was 17.2%. Net income attributable to stockholders of the parent was NT$1.77 billion, with earnings per ordinary share of NT$0.15.
Jason Wang, co-president of UMC, said, “In the fourth quarter of 2017, UMC’s foundry revenue was NT$36.54 billion. During the quarter, our capacity utilization from legacy 8” and 12” technologies continued to reflect robust demand, despite a decrease in 28nm HKMG contribution. The utilization rate of 90% led to overall wafer shipments of 1.67 million 8-inch equivalents. For the full year of 2017, UMC posted a 7% YoY revenue increase in US dollars as wafer shipments increased nearly 11% annually. As a result, our 2017 net income of the parent company grew nearly 16% year on year, despite experiencing unfavorable movement of the NT dollar in the foreign exchange markets.”
Co-president Wang continued, “Looking into the first quarter of 2018, we anticipate our foundry business to remain relatively flat. We are continuing our efforts to capture new 28nm business by working to secure new design opportunities, which will help rebuild our 28nm momentum as these new product tape outs are expected to enter production in the following months. In addition, we will leverage our manufacturing excellence to invest in areas with better ROI potential, including 12” mature technologies as well as tool and equipment upgrades at 8” facilities. As such, our 2018 CAPEX budget will be approximately US$1.1 billion. I believe our approach to optimizing the offerings across 8” and 12” mature technologies while moderating the pace of leading edge expansion will lead to sound financial performance that will preserve the best interests of our shareholders and employees.”
Summary of Operating Results
|(Amount: NT$ million)||4Q17||3Q17||
|Net Operating Revenues||36,631||37,698||(2.8)||38,306||(4.4)|
|Net Other Operating Income and Expenses||801||441||81.6||144||456.3|
|Operating Income (Loss)||1,901||1,629||16.7||2,276||(16.5)|
|Net Non-Operating Income and Expenses||(152)||1,236||-||(1,210)||(87.4)|
|Net Income Attributable to Stockholders of the Parent||1,771||3,473||(49.0)||2,548||(30.5)|
|EPS (NT$ per share)||0.15||0.28||0.21|
|(US$ per ADS)||0.025||0.047||0.035|
Net operating revenues in 4Q17 declined 2.8% to NT$36.63 billion, including NT$36.54 billion from the foundry segment. Revenue contribution from 40nm and below technologies remained at 45%. Gross profit declined 4.5% to NT$6.30 billion, or 17.2% of revenue. Operating expenses decreased 3.8% to NT$5.20 billion. Net other operating income was NT$801 million, leading to operating income of NT$1.90 billion. Net non-operating expense was NT$0.15 billion. Net income attributable to stockholders of the parent was NT$1.77 billion.
Earnings per ordinary share for the quarter was NT$0.15. Earnings per ADS was US$0.025. The basic weighted average number of outstanding shares in 4Q17 was 12,208,239,978, compared with 12,208,239,978 shares in 3Q17 and 12,208,239,978 shares in 4Q16. The diluted weighted average number of outstanding shares was 13,474,873,551 in 4Q17, compared with 13,441,188,010 shares in 3Q17 and 13,442,173,503 shares in 4Q16. The fully diluted share count on December 31, 2017 was approximately 13,890,953,000. On December 31, 2017, UMC held 400 million treasury shares acquired from the 16th and 17th share buy-back programs.
Detailed Financials Section
|COGS & Expenses|
|(Amount: NT$ million)||4Q17||3Q17||
|Net Operating Revenues||36,631||37,698||(2.8)||38,306||(4.4)|
|Other Mfg. Costs||(19,343)||(19,961)||(3.1)||(18,233)||6.1|
|Gross Margin (%)||17.2%||17.5%||22.9%|
|Sales & Marketing||(944)||(1,070)||(11.8)||(1,282)||(26.4)|
Net Other Operating
Income & Expenses
Net operating revenues decreased 2.8% to NT$36.63 billion. COGS decreased to NT$30.33 billion, as depreciation declined 1.4% to NT$10.99 billion. Other manufacturing costs fell 3.1% to NT$19.34 billion. Gross profit was NT$6.30 billion. Operating expenses declined 3.8% to NT$5.20 billion. General and Administrative (G&A) expenses increased 17.5% to NT$1.16 billion. Sales & Marketing fell 11.8% to NT$0.94 billion and R&D expense decreased 7.6% to NT$3.09 billion, or 8.4% of net operating revenues. Net other operating income was NT$801 million, leading to an operating income of NT$1.90 billion.
|Non-Operating Income and Expenses|
|(Amount: NT$ million)||4Q17||3Q17||4Q16|
|Non-Operating Income and Expenses||(152)||1,236||(1,210)|
|Net Interest Income and Expenses||(542)||(538)||(418)|
|Net Investment Gain and Loss||(80)||478||(1,138)|
|Gain and Loss on Disposal of Investment||(22)||538||1,023|
|Exchange Gain and Loss||500||776||(496)|
|Other Gain and Loss||(8)||(18)||(181)|
Net non-operating expense in 4Q17 was NT$152 million, which primarily resulted from the difference in the exchange gain of NT$500 million offset by an NT$542 million in net interest expense and net investment loss of NT$80 million.
Cash Flow Summary
|(Amount: NT$ million)||
For the 3-Month Period Ended
Dec. 31, 2017
For the 3-Month Period Ended
Sep. 30, 2017
|Cash Flow from Operating Activities||12,899||11,447|
|Net income before tax||1,749||2,865|
|Depreciation & Amortization||13,227||13,487|
|Loss (gain) on disposal of investments||22||(538)|
|Impairment loss on financial assets||254||300|
|Exchange gain on financial assets and liabilities||(642)||(541)|
|Changes in working capital||(655)||(2,971)|
|Income tax paid||(152)||(933)|
|Cash Flow from Investing Activities||(6,034)||(4,984)|
|Proceeds from disposal of AFS financial assets||313||563|
|Acquisition of intangible assets||(360)||(251)|
|Cash Flow from Financing Activities||5,214||(4,604)|
|Effect of Exchange Rate||(343)||(54)|
|Net Cash Flow||11,736||1,805|
Cash inflow from operating activities reached NT$12.90 billion. Cash outflow from investing activities totaled NT$6.03 billion, including NT$10.96 billion in CAPEX spending for the foundry segment, resulting in a free cash inflow of NT$1.94 billion. Cash inflow from financing activities was NT$5.21 billion, mainly from a NT$5.40 billion in bond issuance. Net cash inflow in 4Q17 was NT$11.74 billion. Over the next 12 months, the company expects to repay NT$2.52 billion in bank loans.
|(Amount: NT$ billion)||4Q17||3Q17||4Q16|
|Cash and Cash Equivalents||81.68||69.94||57.58|
|Notes & Accounts Receivable||20.97||22.61||23.05|
|Days Sales Outstanding||54||54||54|
|Days of Inventory||53||49||53|
|Total Current Assets||139.16||124.71||110.47|
Cash and cash equivalents increased to NT$81.68 billion. Days of inventory increased to 53 days.
|(Amount: NT$ billion)||4Q17||3Q17||4Q16|
|Total Current Liabilities||88.06||82.36||71.98|
|Notes & Accounts Payable||6.54||6.61||6.85|
|Short-Term Credit / Bonds||52.81||48.74||31.05|
|Payable on Equipment||4.67||5.23||15.04|
|Long-Term Credit / Bonds||53.32||52.36||60.73|
|Long-Term Investment Liabilities||20.49||20.34||20.31|
|Debt to Equity||84%||79%||77%|
Current liabilities increased to NT$88.06 billion, mainly resulting from an increase in Short-Term Credit/Bonds. Total liabilities increased to NT$180.06 billion, leading to a debt to equity ratio of 84%.
Analysis of Revenue2 for Foundry Segment
|Revenue Breakdown by Region|
Revenue from Asia Pacific declined to 45% while sales from North American customers remained flat at 43%. Revenue contribution from Japan increased to 3%.
|Revenue Breakdown by Geometry|
|14nm and below||2%||1%||1%||0%||-|
|0.5um and above||3%||3%||3%||3%||3%|
14nm accounted for 2% of 4Q17 revenue, while 28nm contribution remained at 15%.
|Revenue Breakdown by Customer Type|
Fabless customers represented 91% of revenue in 4Q17.
|Revenue Breakdown by Application (1)|
Communication business increased to 49%. Revenue from the consumer segment declined to 29%.
(1) Computer consists of ICs such as CPU, GPU, HDD controllers, DVD/CD-RW control ICs, PC chipset, audio codec, keyboard controller, monitor scaler, USB, I/O chipset. Communication consists of handset components, broadband, WLAN, bluetooth, Ethernet, LAN, DSP, etc. Consumer consists of ICs used for DVD players, DTV, STB, MP3/MP4, flash controller, game consoles, DSC, smart cards, toys, etc.
Blended ASP Trend for Foundry Segment
Blended average selling price (ASP) remained unchanged in 4Q17.
(To view ASP trend, visit http://www.umc.com/english/investors/4Q17_ASP_trend.asp)
Shipment and Utilization Rate3 for Foundry Segment
(8” K equivalents)
|Quarterly Capacity Utilization Rate|
(8” K equivalents)
During 4Q17, wafer shipments decreased 4.5% to 1,670K. Capacity increased by 1.3% QoQ to 1,886K, resulting in an overall utilization rate of 90% in 4Q17.
Capacity4 for Foundry Segment
Total capacity in the fourth quarter was 1,886K 8-inch equivalent wafers. We expect that first quarter capacity will decline to 1,858K 8-inch equivalent wafers, mainly due to fewer working days and tool maintenance.
Annual Capacity in
thousands of wafers
Quarterly Capacity in
thousands of wafers
|WTK||6"||3.5 – 0.45||422||423||421||448||WTK||104||106||106||106|
|Fab 8A||8"||0.5 – 0.25||825||827||813||813||Fab 8A||204||207||207||207|
|Fab 8C||8"||0.35 – 0.11||357||348||347||347||Fab 8C||91||92||92||87|
|Fab 8D||8"||0.13 – 0.09||341||342||341||358||Fab 8D||85||86||86||86|
|Fab 8E||8"||0.5 – 0.18||418||419||418||418||Fab 8E||103||105||105||105|
|Fab 8F||8"||0.18 – 0.11||417||401||388||388||Fab 8F||107||108||107||102|
|Fab 8S||8"||0.18 – 0.11||347||336||335||335||Fab 8S||92||93||87||84|
|Fab 8N||8"||0.5 – 0.11||753||750||667||547||Fab 8N||190||194||188||188|
|Fab 12A||12"||0.13 – 0.014||970||885||793||700||Fab 12A||246||250||247||247|
|Fab 12i||12"||0.13 – 0.040||537||584||572||573||Fab 12i||131||134||134||134|
|Fab 12X||12"||0.040 – 0.028||97||9||-||-||Fab 12X||35||35||33||19|
|YoY Growth Rate||5%||6%||5%||4%|
(1)One 6-inch wafer is converted into 0.5625(62/82) 8-inch equivalent wafer; one 12-inch wafer is converted into 2.25(122/82) 8-inch equivalent wafers. Capacity total figures are expressed in 8-inch equivalent wafers.
CAPEX for Foundry Segment
|Capital Expenditure by Year - in US$ billion|
|CAPEX||$ 1.4||$ 2.8||$ 1.9||$ 1.4||$ 1.1|
2018 CAPEX Plan
CAPEX spending in 4Q17 was US$364 million, bringing 2017’s total CAPEX to US$1.4 billion. Our 2018 CAPEX budget will be approximately US$1.1 billion.
Brief Summary of Full Year 2017 Consolidated Results
|(Amount: NT$ million)||2017||2016||
|Net Operating Revenues||149,285||147,870||1.0|
|Net Other Operating Income & Expenses||1,653||(263)||-|
|Net Non-Operating Income & Expenses||1,230||(1,347)||-|
|Income Tax Expenses||(1,167)||(984)||18.6|
|Net Income Attributable to Stockholders of the Parent||9,629||8,316||15.8|
|EPS (NT$ per share)||0.79||0.68|
|(US$ per ADS)||0.133||0.114|
- Consolidated revenue in NTD increased 1.0% YoY to NT$149.29 billion, up from NT$147.87 billion in 2016.
- Gross margin was 18.1%, compared to 20.5% in 2016.
- Operating margin was 4.4%, compared to 4.2% in 2016.
- Net income attributable to stockholders of the parent was NT$9.63 billion in 2017.
- EPS was NT$0.79, or EPADS was US$0.133 for 2017.
- The contribution from 28nm technologies and below remained at 17% in 2017. The revenue from 40nm in 2017 increased to 28%.
Annual Sales Breakdown in Revenue for Foundry Segment
|14nm and below||1%||-|
|0.5um and above||4%||3%|
First Quarter of 2018 Outlook & Guidance
- Wafer Shipments: To increase 2-4%
- ASP in USD: To decrease by approximately 2%
- Profitability: Gross profit margin will be in the low teens % range
- Foundry Segment Capacity Utilization: Approximately 90% range
- 2018 CAPEX for Foundry Segment: US$1.1 billion
Recent Developments / Announcements
Oct. 30, 2017 UMC Obtains LEED Gold Certification for Fab 12X
Oct. 25, 2017 UMC 3Q 2017 Financial Results
Please visit UMC’s website for further details regarding the above announcements
Conference Call / Webcast Announcement
Wednesday, January 24, 2018
Time: 5:00 PM (Taipei) / 4:00 AM (New York) / 09:00 AM (London)
|Dial-in numbers and Access Codes:|
|USA Toll Free:||1-866 836-0101|
A live webcast and replay of the 4Q17 results announcement will be available at
www.umc.com under the “Investors / Events” section.
UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor foundry that provides advanced IC production for applications spanning every major sector of the electronics industry. UMC’s comprehensive foundry solutions enable chip designers to leverage the company’s sophisticated technology and manufacturing, which include high volume 28nm High-K/Metal Gate technology, 14nm FinFET mass production, ultra-low power platform processes specifically developed for Internet of Things (IoT) applications and the automotive industry’s highest-rated AEC-Q100 Grade-0 manufacturing capabilities for the production of ICs found in vehicles. UMC’s 11 wafer fabs are strategically located throughout Asia and are able to produce nearly 600,000 wafers per month. The company employs over 19,000 people worldwide, with offices in Taiwan, China, Europe, Japan, Korea, Singapore, and the United States. UMC can be found on the web at http://www.umc.com.
Note from UMC Concerning Forward-Looking Statements
Some of the statements in the foregoing announcement are forward-looking within the meaning of the U.S. Federal Securities laws, including statements about introduction of new services and technologies, future outsourcing, competition, wafer capacity, business relationships and market conditions. Investors are cautioned that actual events and results could differ materially from these statements as a result of a variety of factors, including conditions in the overall semiconductor market and economy; acceptance and demand for products from UMC; and technological and development risks. Further information regarding these and other risks is included in UMC’s filings with the U.S. Securities and Exchange Commission. UMC does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
Safe Harbor Statements
This release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, and as defined in the United States Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by use of words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts.
These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual performance, financial condition or results of operations of UMC to be materially different from what is stated or may be implied in such forward-looking statements. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, but not limited to: (i) dependence upon the frequent introduction of new services and technologies based on the latest developments in the industry in which UMC operates; (ii) the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; (iii) the risks associated with international business activities; (iv) dependence upon key personnel; (v) general economic and political conditions; (vi) possible disruptions in commercial activities caused by natural and human-induced events and disasters, including natural disasters, terrorist activity, armed conflict and highly contagious diseases; (vii) reduced end-user purchases relative to expectations and orders; and (viii) fluctuations in foreign currency exchange rates. Further information regarding these and other risks is included in UMC’s filings with the United States Securities and Exchange Commission. All information provided in this release is as of the date of this release and are based on assumptions that UMC believes to be reasonable as of this date, and UMC does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
The financial statements included in this release are prepared and published in accordance with Taiwan International Financial Reporting Standards, or TIFRSs, recognized by the Financial Supervisory Commission in the ROC, which is different from International Financial Reporting Standards, or IFRSs, issued by the International Accounting Standards Board. Investors are cautioned that there may be significant differences between TIFRSs and IFRSs. In addition, TIFRSs and IFRSs differ in certain significant respects from generally accepted accounting principles in the ROC and generally accepted accounting principles in the United States.
This presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.
1 Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with TIFRSs recognized by Financial Supervisory Commission in the ROC, which is different from IFRSs issued by the International Accounting Standards Board. They represent comparisons among the three-month period ending December 31, 2017, the three-month period ending September 30, 2017, and the equivalent three-month period that ended December 31, 2016. For all 4Q17 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the December 31, 2017 exchange rate of NT$ 29.78 per U.S. Dollar.
2 Revenue in this section represents wafer sales
3 Utilization Rate = Quarterly Wafer Out / Quarterly Capacity
4 Estimated capacity numbers are based on calculated maximum output rather than designed capacity. The actual capacity numbers may differ depending upon equipment delivery schedules, pace of migration to more advanced process technologies, and other factors affecting production ramp-up.
- FINANCIAL TABLES TO FOLLOW -
|UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES|
|Consolidated Condensed Balance Sheet|
|As of December 31, 2017|
|Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)|
|December 31, 2017|
|Cash and cash equivalents||2,743||81,675||20.7%|
|Financial assets at fair value through profit or loss, current||24||717||0.2%|
|Notes & Accounts receivable, net||704||20,974||5.3%|
|Other current assets||589||17,536||4.5%|
|Total current assets||4,673||139,160||35.3%|
|Funds and investments||1,143||34,040||8.6%|
|Property, plant and equipment||6,909||205,742||52.2%|
|Other non-current assets||509||15,157||3.9%|
|Total non-current assets||8,561||254,939||64.7%|
|Current portion of long-term liabilities||919||27,364||6.9%|
|Other current liabilities||235||6,984||1.8%|
|Total current liabilities||2,957||88,061||22.4%|
|Other non-current liabilities||1,300||38,681||9.8%|
|Total non-current liabilities||3,090||92,000||23.3%|
|Equity attributable to the parent company|
|Additional paid-in capital||1,372||40,859||10.4%|
Retained earnings, unrealized gain or loss on available-for-sale
financial assets and exchange differences on translation of
|Total equity attributable to the parent company||7,155||213,081||54.1%|
|Total liabilities and equity||13,234||394,099||100.0%|
|Note：New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2017 exchange rate of NT $29.78 per U.S. Dollar.|
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