United Microelectronics Corporation (NEW)

Welcome everyone to UMC's 2022 second quarter earnings conference call. All lines 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 two hours after the conference has finished. Please visit our website www.umc.com under the Investor Relations Investors Events section. 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 UMC's conference call for the second quarter of 2022. I'm joined by Mr. Jason Wong, the President of UMC, and Mr. Chi-Dong Liu, the CFO of UMC. In a moment, we will hear our CFO present the second quarter financial result, followed by our President's key message to address UMC's focus on third quarter 2022 guidance. Once our President and 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 Investor Financial section. During this conference, we may make forward-looking statements based on management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that could cause such a result to differ materially, including the risk that may be beyond the company's control. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC and the ROC security authorities. During this conference, you may view our financial presentation material, which is being broadcast live through the internet. Now, I would like to introduce UMC CFO, Mr. Chidung Liu, to discuss UMC's second quarter 2022 financial results.

Thank you, Michael. I would like to go through the 2022 investor conference presentation material. which can be downloaded or viewed in real time from our website. Starting on page three, the snapshot of our operating results summary. Our utilization rate in quarter two was still over 100 percent plus, and revenue reached $72 billion. I think, I believe this is record high. And the EPS is 1.74 for the second quarter. compared to 1.61 in the previous quarter and also 0.98 in the same quarter of last year. Next page, please. So on a quarter-over-quarter comparison, revenue grew 13.6% to $72 billion NT. Gross margin rate increased to 46.5% from 43.4% in the previous quarter. and operating income is $28.1 billion, or 39.1 percentage point. Net non-operating income is a loss of $2.58 billion, mainly due to the weakness in the capital market, and UMC's investment portfolio was marked to market, and that's a majority of the $2.5 billion loss in the second quarter. of 2022, and net income reached $21.5 billion, or the equivalent of EPS 1.74 in Q2 of 2022. For the cumulative performance for the first six months of the year, revenue reached $135.4 billion, which is an increase of 38.2%. year-over-year, and this is in the anti-dollar currency. Gross profit is $60.9 billion, or 45% gross margin rate, and operating income reached over $50.4 billion, and an operating margin of 37.3%. And for the EPS of the first half of the year, it's 3.35%. compared to 1.83 in the same period of 2021. Cash before our dividend payout was 183.7 billion by the end of June this year, and total equity for the company is around 283.2 billion. For our 13.8 percent revenue growth in the third quarter, or in the second quarter, three factors, both the ASP and wafer shipment, as well as the NT dollar depreciation, all contribute to our revenue growth in the second quarter. And the factor is roughly one-third of the growth rate each, so that reflects in our ASP growth in the second quarter of 2022. In terms of revenue breakdown, the ratio remains similar between quarter two and quarter one. IDM increased slightly in second quarter to 14 percent. And the segment breakdown, again, remains similar to And we see some minor decrease in computer, but in absolute dollar term, all segments still grow in second quarter of 2022. We have new capacity available in 28 in the second quarter. That helped our 28-22 revenue percentage to grow to 22%. in the second quarter compared to 20 percent in Q1 of this year. And the rest of the geometry breakdown doesn't change too much. As I mentioned, in quarter two, our 12A has a more meaningful capacity growth, which is 10K new capacity came online in the beginning of quarter two. But for quarter three overall capacity compared to quarter two, there's only very minor increase in terms of quarterly capacity. And for capacity of this year on cash basis, it remained around $3.6 billion, which majority goes to capacity-related expansion for 12-inch. So the above is a summary of UMC's result for Quarter 2, 2022. 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.