UMC Reports Second Quarter 2012 Results

Transcription

1 Contacts: Bowen Huang UMC, Investor Relations , ext bowen_huang@umc.com UMC Reports Second Quarter 2012 Results 2Q results exceed guidance; revenue growth to continue into 3Q Second Quarter 2012 Overview 1 : Revenue: increased 16.2% QoQ to NT$27.62 billion (US$ million) Gross margin: 24.4%; operating margin: 11.5% Capacity utilization: 84% Net income: NT$2.99 billion (US$ million) Earnings per share: NT$0.24; earnings per ADS: US$0.04 Taipei, Taiwan, ROC July 25, 2012 United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) ( UMC or The Company ), a leading global semiconductor foundry, today announced its unconsolidated operating results for the second quarter of Revenue was NT$27.62 billion, a 16.2% quarter-over-quarter increase from NT$23.77 billion in 1Q12, and a 1.9% year-over-year decrease from NT$28.15 billion in 2Q11. Gross margin was 24.4%, operating margin was 11.5%, net income was NT$2.99 billion, and earnings per ordinary share were NT$ Dr. Shih-Wei Sun, CEO of UMC, said, In 2Q 2012, UMC s results exceeded our expectations. Wafer shipments grew 18.6% quarter-over-quarter to reach 1.14 million 8-inch equivalent wafers, bringing overall capacity utilization to 84%. Strength from the communication and consumer sectors mainly contributed to the increased shipments. For the upcoming quarter, we expect mild revenue growth, with 40nm percentage contribution increasing significantly as volume production begins for several new products. 1 Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with ROC GAAP, which differ in some material respects from generally accepted accounting principles in the United States. They are un-audited, unconsolidated, and represent comparisons among the three-month period ending Jun 30, 2012, the three-month period ending Mar 31, 2012, and the equivalent three-month period that ended Jun 30, For all 2Q12 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the Jun 30, 2012 exchange rate of NT$29.87 per U.S. Dollar. Page 1 of 12

2 Dr. Sun continued, 40nm, 28nm, 20nm, FinFET 3D transistor technology and the groundbreaking for our Fab 12A P5&P6 in Tainan, Taiwan will solidify UMC s leading-edge technology and capacity foundation to further advance UMC into the next round of growth. Obtaining IBM s 20nm process design kit and FinFET technology will expedite the development of our internal technologies, enabling customers to realize the next generation of low power consumption chips for mobile communication and computing applications. With a complete portfolio of 28nm and 20nm process technologies, Fab 12A P5&P6 readiness is timed to provide sufficient advanced capacity to propel UMC and its customers into a new growth phase. These efforts to secure industry forefront technology and adequate capacity demonstrate UMC s leadership under our Customer-Driven Foundry Solutions approach, and have been overwhelmingly well received from our customers and partners. Dr. Sun added, UMC s advanced technology business is entering another growth cycle. Through our upcoming efforts to enhance mass production technology, capacity expansion, and customer service, we anticipate leading-edge revenue contribution to increase substantially during the second half of this year. However, we are cautious due to the potential for chip demand volatility in the near future, as end demand uncertainties elevate in light of growing European sovereign debt issues, supply chain inventory and customers adopting a conservative stance. We are watching the situation closely so we may respond accordingly to any status changes, while at the same time developing leading-edge and specialty technologies, thus strengthening UMC s solid foundation to ensure stable, long-term growth. Page 2 of 12

3 Summary of Operating Results Operating Results (Amount: NT$ million) 2Q12 1Q12 QoQ % change 2Q11 YoY % change Revenue 27,620 23, ,150 (1.9) Gross Profit 6,740 4, , Operating Expenses (3,558) (3,226) 10.3 (3,398) 4.7 Operating Income 3,182 1, ,320 (4.2) Non-Operating Income Net Income 2,990 1, ,192 (6.3) EPS (NT$ per share) (US$ per ADS) Revenue increased 16.2% QoQ to NT$27.62 billion from NT$23.77 billion in 1Q12, and decreased 1.9% YoY from NT$28.15 billion in 2Q11. Gross profit was NT$6.74 billion, or 24.4% of revenue, compared to NT$4.55 billion, or 19.1% of 1Q12 revenue. Operating income for the quarter was NT$3.18 billion, or 11.5% of revenue, compared to NT$1.32 billion, or 5.6% of 1Q12 revenue. Net income in 2Q12 was NT$2.99 billion, compared to NT$1.34 billion in 1Q12. Earnings per ordinary share for the quarter were NT$0.24. Earnings per ADS 2 were US$ The basic weighted average number of outstanding shares in 2Q12 was 12,621,506,549, compared with 12,613,307,158 shares in 1Q12 and 12,513,899,178 shares in 2Q11. The diluted weighted average number of outstanding shares was 13,469,988,568 in 2Q12, compared with 13,420,471,778 shares in 1Q12 and 13,013,072,483 shares in 2Q11. The fully diluted share count on June 30, 2012 was approximately 14,072,176,000. On June 30, 2012, UMC held 300 million treasury shares acquired from the 14th share buy-back program. 2 One ADS represents five Taiwan-listed ordinary shares. Page 3 of 12

4 Detailed Financials Section Revenue increased 16.2% QoQ to NT$27.62 billion from NT$23.77 billion in 1Q12, mainly due to increased shipment volume. Other manufacturing costs rose to NT$13.95 billion to correspond with increased wafer shipments. Research and development expenses increased to NT$2,440 million mainly due to an increase for 28nm advanced technology development. The total R&D expense was 8.8% of revenue in 2Q12. COGS & Expenses (Amount: NT$ million) 2Q12 1Q12 QoQ % change 2Q11 YoY % change Revenue 27,620 23, ,150 (1.9) COGS (20,880) (19,215) 8.7 (21,432) (2.6) Depreciation (6,932) (6,794) 2.0 (6,495) 6.7 Other Mfg. Costs (13,948) (12,421) 12.3 (14,937) (6.6) Gross Profit 6,740 4, , Gross Margin (%) 24.4% 19.1% 23.9% Total Operating Exp. (3,558) (3,226) 10.3 (3,398) 4.7 G&A (626) (552) 13.4 (588) 6.5 Sales & Marketing (492) (509) (3.3) (585) (15.9) R&D (2,440) (2,165) 12.7 (2,225) 9.7 Operating Income 3,182 1, ,320 (4.2) Net non-operating income during 2Q12 increased QoQ to NT$261 million. Net investment loss increased from NT$176 million in 1Q to NT$429 million, mainly from investment loss accounted for under the equity method. Exchange gain was mainly due to investee capital deduction and USD appreciation. Increase to other gain was mainly from the valuation gain of financial liabilities. Non-Operating Income (Expenses) (Amount: NT$ million) 2Q12 1Q12 2Q11 Net Non-Operating Income Net Interest Income (Loss) (8) (5) 17 Net Investment Income (Loss) (429) (176) (253) Gain (Loss) on Disposal of Investment Exchange Gain (Loss) 427 (24) 29 Other Gain (Loss) Page 4 of 12

5 Operating cash inflow was NT$10.25 billion. Free cash flow for 2Q12 was negative NT$7.07 billion, as CAPEX spending for the quarter was NT$17.32 billion. The NT$10.40 billion of financing cash inflow primarily reflected the proceeds from bond issuance. Net cash inflow was NT$4.96 billion in 2Q12. Cash Flow Summary (Amount: NT$ million) For the 3-Month Period Ended Jun. 30, 2012 For the 3-Month Period Ended Mar. 31, 2012 Cash Flow from Operations 10,254 9,498 Net Income 2,990 1,335 Depreciation & Amortization 8,084 7,865 Changes in Working Capital (999) 747 Other 179 (449) Cash Flow from Investing (15,865) (9,338) Capital Expenditures (17,324) (9,659) Liquid of Investment 2,376 - Acquisition of Long-term Investments - (16) Other (917) 337 Cash Flow from Financing 10, Bank Loans Bonds Issued 9,991 - Other Effect of Exchange Rate 171 (307) Net Cash Flow 4, Cash and cash equivalents increased to NT$36.57 billion was mainly due to the issuance of domestic bonds in 2Q12. The four day reduction in average inventory turnover was due to higher COGS as a result of increased wafer shipment in 2Q. Current Assets (Amount: NT$ billion) 2Q12 1Q12 2Q11 Cash & Cash Equivalents Notes & Accounts Receivable Days Sales Outstanding Inventories Avg. Inventory Turnover Total Current Assets Total liabilities increased to NT$72.91 billion in 2Q12. This was due to the addition of NT$6.32 billion of cash dividends payable to stockholders in current liabilities, and also the domestic bond issuance in long-term liabilities. Consequently, UMC s debt to equity ratio increased to 35%, which will be reduced after the dividends are paid out in 3Q12. Liabilities (Amount: NT$ billion) 2Q12 1Q12 2Q11 Total Current Liabilities Accounts Payable Short-Term Credit / Bonds Cash Dividends Payable Payable on Equipment Other Long-Term Liabilities Total Liabilities Debt to Equity 35% 25% 32% Page 5 of 12

6 Analysis of Revenue 3 Revenue breakdown by region remained unchanged QoQ. Revenue Breakdown by Region Region 2Q12 1Q12 4Q11 3Q11 2Q11 North America 45% 45% 47% 48% 49% Asia Pacific 46% 46% 43% 40% 39% Europe 8% 8% 9% 11% 11% Japan 1% 1% 1% 1% 1% Revenue contribution from different geometry nodes remained constant QoQ. Since UMC has broadened its leading-edge technology customer base, we expect 40nm and below revenue contribution percentage to jump in 2H Revenue Breakdown by Geometry Geometry 2Q12 1Q12 4Q11 3Q11 2Q11 40nm and below 9% 9% 8% 6% 6% 40nm<x<=65nm 40% 40% 41% 34% 31% 65nm<x<=90nm 7% 6% 6% 8% 13% 90nm<x<=0.13um 18% 20% 23% 24% 24% 0.13um<x<=0.18um 10% 10% 10% 13% 12% 0.18um<x<=0.35um 11% 11% 9% 11% 9% 0.5um and above 5% 4% 3% 4% 5% The percentage of revenue from Fabless customers increased slightly from 80% to 82% in 2Q12. Revenue Breakdown by Customer Type Customer Type 2Q12 1Q12 4Q11 3Q11 2Q11 Fabless 82% 80% 79% 76% 73% IDM 18% 20% 21% 24% 27% Communication demand showed greater QoQ strength this quarter, including WIFI, and handset related components. Revenue Breakdown by Application (1) Application 2Q12 1Q12 4Q11 3Q11 2Q11 Computer 17% 21% 14% 17% 15% Communication 54% 49% 60% 53% 53% Consumer 26% 27% 23% 27% 29% Memory 1% 1% 1% 1% 1% Others 2% 2% 2% 2% 2% (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. Memory consists of DRAM, SRAM, Flash, ROM, and EEPROM. 3 Revenue in this section represents wafer sales. Page 6 of 12

7 Blended Average Selling Price Trend The blended average selling price (ASP) during 2Q12 remained flat. Unit: USD 1,500 1, Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Shipment and Utilization Rate 4 Wafer shipments increased 18.6% sequentially to 1,142K in 2Q12, compared to 963K 8-inch equivalent wafers in 1Q12. Accordingly, overall utilization rate for the quarter increased to 84%. Wafer Shipments (8 K equivalents) Wafer Shipments 2Q12 1Q12 4Q11 3Q11 2Q11 1, ,025 1,145 Quarterly Capacity Utilization Rate 2Q12 1Q12 4Q11 3Q11 2Q11 Utilization Rate 84% 71% 68% 74% 87% Total Capacity (8 K equivalents) 1,372 1,364 1,376 1,358 1,330 4 Utilization Rate = Quarterly Wafer Out / Quarterly Capacity Page 7 of 12

8 Capacity 5 Capacity during the second quarter was 1,372K 8-inch equivalent wafers. The estimated capacity for the third quarter will increase to 1,376K 8-inch equivalent wafers owing to the advanced capacity expansion at our Fab12A in Tainan. Annual Capacity in thousands of wafers FAB Geometry (um) Quarterly Capacity in thousands of wafers FAB 3Q12E 2Q12 1Q12 4Q11 Fab6A 6" Fab6A Fab8A 8" Fab8A Fab8C 8" Fab8C Fab8D 8" Fab8D Fab8E 8" Fab8E Fab8F 8" Fab8F Fab8S 8" Fab8S Fab12A 12" Fab12A Fab12i 12" Fab12i Total (1) 5,322 4,791 4,586 4,507 Total ,376 YoY Growth Rate 11% 4% 2% 5% (1) One 6-inch wafer is converted into (6 2 /8 2 ) 8-inch equivalent wafer; one 12-inch wafer is converted into 2.25(12 2 /8 2 ) 8-inch equivalent wafers. Capacity total figures are expressed in 8-inch equivalent wafers. CAPEX The 2012 CAPEX budget remains at US$2 billion. UMC spent US$584 million in the second quarter, bringing CAPEX spending to US$909 million for the first half of the year. UMC Capital Expenditure by Year - in US$ billion Year CAPEX $ 1.6 $ 1.8 $ 0.55 $ 0.35 $ CAPEX Plan 8" 12" Total UMC 2% 98% Approximately US$2 billion 5 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. Page 8 of 12

9 Recent Developments / Announcements Jul. 9, 2012 Jun. 29, 2012 Jun. 12, 2012 Lattice Announces Strategic Partnership with UMC for 40nm and 28nm Manufacturing UMC Aligns With IBM on 20nm Process with FinFET 3D Transistors UMC Shareholders Elect 12th term of Directors at Annual Shareholders Meeting - The members of the Board remain unchanged. To maintain the company's high priority of corporate governance transparency, the number of independent and outside directors this year accounts for more than half of the 9 board seats. This will help the Company retain a responsive interaction between the Board and the management team. At the meeting, shareholders also approved: - The 2011 Business Report and Financial Statements. The Company's revenue for 2011 was NT$ billion and net income after tax was NT$10.61 billion. - The 2011 retained earnings distribution, which includes shareholder cash dividend of NT$6,316 million, estimated at approximately NT$0.5 per share, employee cash bonus of NT$1,618 million, and directors' remuneration of NT$9 million. Jun. 5, 2012 A*STAR Institute of Microelectronics and UMC to Develop TSV Technology for BSI Image Sensor Used in Mobile Applications May. 24, 2012 UMC Holds Groundbreaking Ceremony for Fab 12A Phase 5 & 6 Apr. 30, 2012 Apr. 27, 2012 Apr. 25, 2012 UMC Receives 2011 Best Supplier Award from Xilinx UMC Files Form 20-F for 2011 with US Securities and Exchange Commission UMC 1Q 2012 Financial Results Please visit UMC s website for further details regarding the above announcements Page 9 of 12

10 Third Quarter of 2012 Outlook & Guidance Quarter-over-Quarter Guidance: Wafer shipment: Increase marginally Wafer ASP in US$: Increase marginally Gross Margin: Mid 20% range Capacity utilization: Remain flat from previous quarter Segments: The computer and consumer segments will outpace communication segment. Conference Call / Webcast Announcement Wednesday, July 25, 2012 Time: 8:00 PM (Taipei) / 8:00 AM (New York) / 1:00 PM (London) Dial-in numbers and Access Codes: USA Toll Free: UK Toll Free: Singapore and Other Areas: Access Code: UMC A live webcast and replay of the 2Q12 results announcement will be available at under the Investor Relations \ Investor Events section. About UMC UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor foundry that provides advanced technology and manufacturing services for applications spanning every major sector of the IC industry. UMC's customer-driven foundry solutions allow chip designers to leverage the strength of the company's leading-edge processes, which include 28nm, mixed signal/rfcmos, and a wide range of specialty technologies. Production is supported through 10 wafer manufacturing facilities that include two advanced 300mm fabs; Fab 12A in Taiwan and Singapore-based Fab 12i are both in volume production for a variety of customer products. The company employs over 13,000 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at Page 10 of 12

11 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 future outsourcing, wafer capacity, technologies, 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 concerning these risks is included in UMC's filings with the U.S. SEC, including on Form F-1, F-3, F-6 and 20-F, each as amended. Safe Harbor Statements This release contains forward-looking statements. These statements constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 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) our dependence upon the frequent introduction of new services and technologies based on the latest developments in our industry; (ii) the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; (iii) the risks associated with international global business activities; (iv) our 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 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 U.S. Securities and Exchange Commission, including its registration statements on Form F-1, F-3, F-6 and 20-F, in each case as amended. 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 unaudited and unconsolidated, and prepared and published in accordance with ROC GAAP. Investors are cautioned that there are many differences between ROC GAAP and US GAAP. 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 Page 11 of 12

12 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. - FINANCIAL TABLES TO FOLLOW - Page 12 of 12