On January 31, UMC, a major wafer foundry, held a press conference and announced its results for the fourth quarter of 2023, with consolidated revenue of NT$549NT$600 million, compared to NT$570 in the third quarter700 million yuan, a decrease of 3 from the previous month7%。with NT$678 in the fourth quarter of 2022400 million yuan, down 19% year-on-year. Gross margin reached 32 in the fourth quarter4%, net profit attributable to the parent company was NT$13.2 billion, and EPS was NT$106 yuan.
Wang Shi, co-general manager of UMC, said that the challenging global economic environment in the fourth quarter of 2023 has lengthened the time schedule for inventory adjustment in the semiconductor industry. As a result, UMC's wafer shipments decreased by 25%, and the overall capacity utilization rate decreased slightly to 66%. With the expansion of Tainan Fab 12A P6, the revenue of 22 28nm products accounted for 36% of the wafer revenue in the fourth quarter, reaching a record high.
Wang Shi emphasized that in 2023 overall, UMC has demonstrated resilience in the face of a challenging environment, and the optimization of its product portfolio has continued to increase the average selling price in 2023, with a mid-single-digit growth from the previous year. Despite a significant decline in capacity utilization in 2023 compared to the previous year, UMC still managed to achieve a rate of 34Gross margin of 9% maintained solid structural profitability. The strong financial performance is attributable to our diverse and close-knit customer base and revenue contribution from special processes.
For the performance outlook for the first quarter of 2024, UMC expects wafer shipments to increase by 2% to 3% in the quarter, mainly due to the gradual recovery of overall wafer demand, but there are still seasonal factors and customers taking a more cautious attitude towards inventory, resulting in a decline in capacity utilization, from 66% in the previous quarter to 61% to 63%, and the gross margin will remain stable at about 30%.
In addition, UMC adopted a one-time ** reduction for customers in the first quarter, and the estimated average selling price (ASP) decreased by 5%. This will also directly lead to a decrease in gross margin. On the whole, the operation in the first quarter will show a trend of "volume increase and price decline".
Looking forward to the full year of 2024, Wang Shi pointed out that even if the overall economic environment is uncertain, rising interest rates and inflationary pressures and other disruptive factors are still there, resulting in relatively limited order visibility, UMC is still striving for growth, and takes the annual growth rate of the industry as the growth target, optimistic that the second half of the year will be better than the first half of the year, and is cautiously optimistic about the whole year.
Wang Shi further explained that in the first quarter of 2024, although customers are still more cautious about inventory, the overall wafer demand is expected to gradually recover. Looking ahead, UMC will continue to develop next-generation products in collaboration with industry leaders through diversified manufacturing bases and differentiated 12-inch special manufacturing processes, and navigate the competitive market and rising geopolitical tensions.
At present, UMC is actively promoting industrial cooperation, first cooperating with Arm, a global semiconductor IP manufacturer, to produce PQV test chips based on UMC's 14nm FinFET process, which has been designed and tape out, representing that the core of the Arm Cortex-A series processor has passed UMC's high-end wafer process verification. UMC is taking a positive view of the above 14nm cooperation and continues the successful integration of the ARM Artisan physical IP into UMC's 28nm high-K metal gate mass production process.
In addition, UMC has partnered with Intel on the 12nm FinFET process, which is an important part of UMC's strategy to pursue cost-effective capacity expansion and technology node upgrades, as part of UMC's ongoing commitment to customers. This cooperation will not only help customers smoothly upgrade to new key technology nodes, but also benefit from the resilience of the ** chain brought by the expansion of production capacity in North America. UMC looks forward to this strategic collaboration on the 12nm FinFET process, leveraging the complementary strengths of both companies to expand UMC's addressable market and significantly accelerate the technology development timeline."
In terms of capital expenditure, UMC said that the capital expenditure in the fourth quarter of 2023 was about 6US$5.7 billion, with annual capital expenditure of about US$3 billion, a year-on-year increase of about 111%。Capital expenditures for 2024 are estimated to increase 10% from 2023 to $3.3 billion, with 95% expected to be spent on 12-inch plants and 5% for 8-inch plants. In addition, with the continuous production capacity of Nanke 12A P6 plant, the production capacity is estimated to increase to 121 in the first quarter of this year20,000 pieces, a quarterly increase of 07%, an annual increase of 81%。
Editor: Xinzhixun-Lin Zi.