United Microelectronics Corporation (NEW)

Welcome everyone to UMC's 2020 first quarter earnings conference call. All lights have been placed on mute to prevent background noise. After the presentation, there will be a question and answer session. Please follow the instructions given at that time if you would like to ask the question. For your information, this conference call is now being broadcast live over the internet. Webcast replay will be available within an hour after the conference is finished. please visit our website, www.umc.com, under the Investor Relations, Investors, Events section. And now I would like to introduce Mr. Michael Lin, Head of Investor Relations at UMC. And Mr. Lin, please begin.

Thank you and welcome to the UMC's conference call for the first quarter of 2020. I am joined by Mr. S.G. Jian, the Co-President of UMC. and Mr. Chi-Dong Liu, the CFO of UMC. In a moment, we will hear our CFO present the first quarter financial results, followed by our President's key message to address UMC's focus and the second quarter 2020 guidance. Once our President and the CFO complete their remarks, there will be a Q&A session. UMC's quarterly financial reports are available at our website, www.umc.com, under the Investors Financial section. During this conference, we will make forward-looking statements based on the management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that could cause special results to differ materially, including the risks that may be beyond companies' control. For this risk, please refer to UMC's filing with the SEC in the U.S. and the ROC security authorities. Now, I would like to introduce UMC's CFO, Mr. Chi-Dong Liu, to discuss our first quarter 2020 financial results. Mr. Thank you, Michael.

I would like to go through the first quarter 2020 investor conference presentation material, which can be downloaded from our website. Starting on page three, the first quarter of 2020 consolidated revenue was 42.27 billion NT dollars with a gross margin at around 19.2%. The net income attributable to the stockholder of the parent was 2.21 billion NT and the earnings per ordinary shares were 19 cent NT dollar. Our capacity utilization rate in the first quarter was 93%. versus 92% in the previous quarter and 83% in the same first quarter of 2019. For page four, as we discussed earlier, sequential growth is about 1% to 42.2 billion NT for operating revenue. Gross margin almost quadrupled, sorry, almost reached 20%. It's around 19.2%. of gross margin rate, or 8.1 billion NT dollars. And operating income is 3.4 billion NT, or 8.1% operating income percentage. And because of the global stock market meltdown, we book an unrealized market-to-market investment loss, nearly 2 billion NT in the first quarter of 2020, which will result in about 2.59 billion of net non-operating losses. And as a result, our net income attributable to stockholder of the parent in the first quarter of 2020 was 2.2 billion NT or an equivalent of 19 cents NT dollars in EPS. On page 5, for year-over-year comparison, our revenue grew by nearly 30% to 42.6% from the same period of last year. And gross margin almost quadrupled here to $8.1 billion compared to $2.26 in the first quarter of 2019. And operating expenses has increased about 16%. largely due to the combination of USJC, which we acquired on October 1st of last year. And net earning is about 0.19 versus 0.1 in the same quarter of last year. For page six, our cash on hand has reached $95 billion NT, and total equity for the company is about $210 billion NT. On page 7, our quarterly ASP down a little bit in the first quarter by low single digits. And for next page, for revenue breakdown by geography, Asia represents 56% of our total revenue, while U.S. is about 29%. For IBM, remain almost unchanged, around 12% versus the last quarter of 13%. And communication remain at 54% of the pie, which is the largest shares of our application breakdown. For technology breakdown, 40 nanometer growth to 25% from the 22% in the previous quarter. And 28 nanometers represent about 9% of the revenue, which is mainly because of our larger revenue base. And first quarter, we have quite a few scheduled FED maintenance, new FED maintenance. So there's not much growth in the capacity, but the growth of capacity will be more significant in the fall. It's not really significant, but will be more noticeable in the second quarter, mainly coming from FEDs, AN or HGN FEDs, as well as some incremental increase in 12A. Our cap has remained unchanged at $1 billion US. About 85% of the capacity extension-related capacity goes to 12-inch. So the above is a summary of UMC's results for first quarter of 2020. More details are available in the report, which has been posted on our website. I will now turn the call over to President of UMC, Mr. H.C. Chen.