UMC Reports October Revenue Growth, EPS Estimated at NT$4

UMC (2303) announced a 12.8% month-on-month and 11.3% year-on-year increase in revenue for October. Analysts note that while competition remains intense in mature process technologies and customers are exercising caution in their orders, the recovery is expected to be gradual. The company estimates earnings per share (EPS) for the year to be around NT$4.

In Q4, UMC is expected to benefit from increased demand in AI-related applications, with better-than-expected performance in computing products offsetting the decline in the communications and consumer sectors. The 22nm and 28nm process nodes are expected to drive growth, with wafer shipments for the quarter anticipated to be on par with the previous quarter. Capacity utilization is projected to decrease to 60%, and the average selling price (ASP) in US dollars is expected to remain similar to Q3 due to changes in product mix.

Given the decline in capacity utilization, along with the appreciation of the New Taiwan Dollar (NTD) and an increase in depreciation, UMC's overall gross margin is forecast to decrease slightly in Q4, with a margin of approximately 30%. EPS for the quarter is expected to be around NT$0.9, with full-year EPS projected at NT$4.

Looking ahead to 2025, UMC anticipates a mild recovery in the industry. Inventory levels are expected to return to normal after several quarters of adjustments. However, the automotive sector is expected to take more time to recover, likely reaching normal levels by Q2. Although customers remain cautious, UMC forecasts an increase in wafer shipments for the year. The company's pricing strategy will remain flexible despite an oversupply market, as UMC works with customers to expand market share. UMC's focus will continue to be on high-end smartphone displays, smartphone RF front-end modules, and product mix optimization.

For 2025, UMC expects pricing conditions to be similar to 2024, with a one-time annual price adjustment in Q1. The company anticipates EPS for 2025 to remain above NT$4.