United Microelectronics Corporation (NEW)

Welcome, everyone, to UMC's 2023 first quarter earnings conference call. All lines have been placed on mute to prevent background noise. And after the presentation, there will be a question and answer session. Please follow the instructions given at the time if you would like to ask a question. And 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. And 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 UMC's conference call for the first quarter of 2023. I am 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 first quarter financial result, followed by our President's key message to address UMC's focus and second quarter 2023 guidance. Once our President and 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 investor's 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 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's CFO, Mr. Chi-Dong Liu, to discuss UMC's first quarter 2023 financial result.

Thank you, Michael. I would like to go through the first quarter of 2023 investor conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page four, the first quarter of 2023, consolidated revenue was $54.2 billion, with gross margin at 35.5%. The net income attributed to the stockholder of the parent was $16.2 billion NTD, and earnings per ordinary shares were $1.31 NT. Wafer shipments in this quarter come at 1,826,000 AH equivalent wafers, which was a decline of 17.5% quarter over quarter, which also fall in the better end of our previous guidance of 17 to 19% decline for the first quarter. Utilization rate in first quarter is as we guided, around 70%. For page 5, the sequential comparison, revenue declined 20.1% to $54.2 billion. Other than the 17.5% wafer shipment decline, there's also a negative impact of 3% plus impact from the forex. due to NT dollar appreciation. Gross margin rate was 35.5%, which is a 34% decline to 19.2 billion NT. Operating expenses was lower than the level of Q4 last year at 5.78 billion. This is typical First quarter seasonal factor, so we do expect this number to increase in the second quarter of 2023. Non-operating income total reached $4.64 billion, which is quite a significant improvement from the fourth quarter of last year, mainly due to the recovery in the stock market which is we mark to market for our holdings in those portfolios. And net income is $15.38 billion, and net income attributable to the shareholders of the parent is $16.1, with a net income margin of 29.9 percent. EPS is 1.31 for the first quarter of 2023. On a year-over-year comparison on page six, revenue declined 14.5%, and net income declined by 18.3%. So the first quarter of 2022 was 1.61 in EPS, and this quarter is mentioned 1.31 for the first quarter of 2023. So on page seven, cash remained nearly unchanged, around $171 billion NT. Due to the continuous CAPEX, we have seen our total asset increase to $549.6 billion NT. On page 8, our blended ASPE for each wafer equivalent has inched up in Q1-23. For page 9, Our geographic breakdown for revenue, Asia show bigger decline from 54 percent in the previous quarter to 50 percent in the first quarter. And every other region has increased sequentially. And for page 10, IDM has shown a stronger growth in the first quarter. Now the percentage of revenue reached 23 percent, when fabulous represents about 77 percent of our total revenue. In terms of segment breakdown on page 11, there's quite a meaningful growth in the other segment, which is mainly driven by the auto segment. When computer and consumer and also communication or showing some decline in percentage of revenue. On page 12, our revenue for 14 nanometer technology and below represent around 41% of our total revenue, although 28 and 22 nanometers still somewhat remain unchanged at around 26%. And 40 nanometers show about 2 percent decline, from 17 to 15 percent. On page 13, Q1 2023 was the lowest point in terms of available capacity, mainly due to the annual maintenance schedule for selected sites. Quarter two, you will go back to the normal, and also on top of that will be P6, our Thailand FAB expansion will start to kick in, and we can see the capacity increase for FAB 12A. So, overall, we will see a low single-digit increase in our available capacity from quarter to 2023. On page 14, our annual budget for CAPEX remain unchanged. around $3 billion, and it's going to be a little bit front-end loaded in the first half. And 90 percent will be related to 12-inch extension, and 10 percent is related to 8-inch capacity. So the above is the summary of UMC results for first quarter of 2023. 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, Jason Wong.