United Microelectronics Corporation (NEW)

Welcome everyone to UMC's 2020 fourth quarter earnings conference call. All lines have been placed and minged 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 a 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. Mr. Lin, please begin.

Thank you and welcome to the UMC's Conference Call for the fourth quarter of 2020. I am joined by Mr. Jason Wang, the President of UMC, and Mr. Chi-Dong Liu, the CFO of UMC. In a moment, we will hear our CFO present the fourth quarter financial results, followed by our President's key message to address UMC's focus and the first quarter 2021 guidance. Once our President and the CFO complete their remarks, there will be a Q&A section. UMC's quarterly financial reports are available at our website, www.umc.com, under the Investors Financial section. During this conference, we may 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 actual results to differ materially including the risk that may be beyond the company's control. For this risk, please refer to UMC's filing with the SEC in the U.S. and the IOC security authorities. Now, I would like to introduce UMC's CFO, Mr. Chidong Liu to discuss UMC's fourth quarter 2020 financial results.

Thank you, Michael. I'd like to go through the Q4 2020 investor conference presentation material, which can be downloaded from our website. Starting on page 3, Q4 of 2020, consolidated revenue was $45.3 billion NT, with a growth margin at 23.9%. The net income attributable to the stockholder of the parent was 11.2 billion NT and earnings per ordinary share were 92 cents NT dollars. Capacity utilization rate in Q4 climbed to 99% compared to 97% in the Q3. And if you turn to page 4, our quarterly comparison financial performance, revenue increased about 1% after the NT dollar impact, reached 45.3 billion NT. Growth margin, 23.9%, or 10.8 billion NT. Because of some employee-related compensation and also share-based scheme, our operating expenses increased to 6.3 billion in the fourth quarter of 2020. And as a result, operating income is around 5.6 billion, or 12.4%. And because of the strong stock market, our mark-to-market valuation has contributed to most of our non-operating income in Q4 2020, which was 5.6 billion NTD. So our net income in Q4 last year was $10.9 billion, and net income attributable to the stockholder of the parent is $11.2 billion. EPS is 0.92. On page 5, which is a year-over-year comparison, our revenue growth 19.3% in NT dollars to $176.8 billion. In U.S. dollars, the growth rate was roughly around 26%. And among the growth, around half is contributed by the combination of USJC in Japan. And growth margin grew to almost 8 percentage points, to 32.1%, or 38.99 billion NT. Operating expenses is Similar to the revenue, we also have some combined expenses from USJC and increase year-over-year around 6.6%. Operating income jumped, rose 369% to 32 billion NT. Operating margin rate was 12.5%. Net non-operating income is around $5.9 billion, which is a similar reason as the Q4 result. And net income attributable to the stockholder of the parent for the full year was $29.2 billion, or 16.5%. And full-year EPS is $2.42 per share. So on page 6, our balance sheet highlights cash remained around 94 billion NT, and total equity has increased to 235 billion NT dollars. For Q4 of 2020 on page 7, our blended ASP increased a little bit less than 2% in the fourth quarter of last year. And for revenue breakdown on page 8, Asia continued to climb to 61%. And the other region doesn't really change much. For the full year, it's almost identical year-over-year comparison in terms of geographic breakdown from page 9. For page 10 and also page 11 is the revenue breakdown by customer type. And IBM continues to be around 12% to 13%. for both Q4 and the full year of 2020. On page 12, revenue breakdown by segment, communication declined a little bit to 49% in the fourth quarter, and computer is the highest growth segment in the Q4 of 2020. Again, for the full year segment breakdown on page 13, ratio didn't really change much on a year-over-year comparison. On page 14, our 28nm percentage of revenue continued to increase. In Q4, now it's around 18% of our total revenue. And for the previous quarter, 28nm revenue was 14%. And for the full year, 28nm net revenue grew from 11% in 2019 to 14% in year 2020. Page 15 is our capacity breakdown table . Because of the shorter working days and also Chinese New Year holidays in Q1 2021, our available capacity is a little bit less than that of Q4. However, we continue to extend our capacity mainly in our 12a, 12x, as well as 12a and also 12m. So for the full year capacity, we continue to see quarterly growth starting from Q2 of 2021. For our annual CAPEX budget, Current forecast is around 1.5 billion U.S. dollars for 2021. And the breakdown is about 85% 12-inch related and also mainly focused on 20 nanometers. So the above is a summary of UMC's results for Q4 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. Jason Wong.