United Microelectronics Corporation (NEW)

Welcome, everyone, to UMC's 2022 third 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 is finished. please visit our website, www.umc.com, or to the Investor Relations, Investors, Events section. Now, I would like to introduce Mr. Michael Lin, Head of Investor Relations at UMC. Mr. Lin, please begin.

Thank you, and welcome to UMC's conference call for the third quarter of 2022. 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 third quarter financial results, followed by our President's key message to address UMC's focus and fourth quarter 2022 guidance. Once our President and CFO complete their remarks, there will be a Q&A section. UMC's quality 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 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 risks 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 filing 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's CFO, Mr. Chi-Dong Liu, to discuss UMC's third quarter 2022 financial result. Thank you, Michael.

I would like to go through the 3Q 2022 investor conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page 4, The third quarter of 2022, on Saturday, revenue was $75.39 billion NT, with gross margin at $47.3. Net income attributable to the stockholder of the parent was $27 billion NT, and the earnings per ordinary shares were $2.19 NT. Utilization rate in the third quarter remained at 100% plus, and Overall, and also pretty much in line with our previous quarter's guidance. Next page, please. So, for the third quarter, revenue grew by 4.6 percent, sequentially, to $75.39 billion. Gross margin rate of 47 percent, or in absolute dollar terms, is $35.66 billion. And operating income margin reached 40% compared to 39.1% in the previous quarter. And net income attributable to the shareholder of the parent was 26.99 billion NT or equivalent of EPS 2.19. This is meaningful growth compared to 1.74 EPS in the previous quarter. For the first three quarters, the cumulative revenue grew by 37 percent, thanks to the help from shipment increase, as well as ASP enhancement and also the NT dollar depreciation. All three factors play important roles. And for the gross margin rate for the first three quarters was around 45.8 percent, or $96.6 billion. Operating income surpassed $80 billion NT for the first three quarters, which is 38.3% operating income margin rate compared to 22.1% in the same period of 2021. For the net income for the shareholder of the parent is 68.131, or 32.3%. And that's a 71 percent year-over-year growth. And EBS for the first three quarters reached 5.54 NT dollars per share. So, we pay out $3 per share cash dividend back in the early part of third quarter. And after that, the post-dividend cash on hand is about 180 billion NT. And our total equity today is about $315 billion for the end of third quarter of this year. And as I mentioned earlier, AC remains firm in line with our previous quarter's guidance, continues to stay at the current level in the third quarter of 2022. In terms of revenue breakdown, we see some decline. The percentage of revenue for our Asian market from 65 percent in the previous quarter to 62 percent in third quarter of 22. And for the other regions, we see a minor increase. IDM continued to outperform Fabulous in recent quarter, especially in the third quarter. And right now, IDM stands for about 17 percent. of our total revenue. In terms of segment breakdown, it's not much change except computer now is in same percentage of revenue as our other revenue, which is mainly composed of auto and industrial. In terms of geometry breakdown, for 22 titanium nanometer reach 25% for the first time, and that's mainly due to the newly increased capacity from our P5 facility in Thailand. And 65% is about 18%, and 90 nanometer is about 8%. Capacity in Q4 will only slightly increase, mainly coming from He Jian, the Suzhou 8-inch wafer fab. And every other fab will remain about similar. We have revised our four-year cash-based CAPEX from the previously $3.6 billion now to $3 billion U.S. dollars for year 2022, and we can elaborate more details for this downward revision for our annual CAPEX budget. And the above is a summary of UMC's results for third quarter of 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.