United Microelectronics Corporation (NEW)

Welcome everyone to UMC's 2023 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 an hour after the conference is 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. Mr. Lin, please begin.

Thank you and welcome to UMC's conference call for the second quarter of 2023. I'm joined by Mr. Jason Wang, the President of UMC. and Mr. Chidong 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 2023 guidance. Once our President and CFO complete their remarks, there will be a Q&A session. UNC's quarterly financial reports are available at our website, www.unc.com, under the Investors' Financials 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 risk that may be beyond the company's control. For a more detailed description of this risk 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. Chidong Liu, to discuss UMC's second quarter 2023 financial result.

Thank you, Michael. I'd like to go through the 2Q23 investor conference presentation material, which can be downloaded or viewed in real time from our website. Study on page 4, the second quarter of 2023. Consolidated revenue was 56.3 billion NT, with a gross margin at around 36%. The net income attributable to the stockholder of the parent was 15.6 billion NT, and earnings per ordinary shares were 1.27 NT dollars. In the second quarter of 2023, the utilization rate was 71 percent, slightly up from 70 percent in the previous quarter. On page five, there's a quarterly sequential comparison income statement. Revenue grew 3.8 percent quarter over quarter to 56.3 billion, mainly due to better product mix lead to a higher ASP. Gross margin rate at 36 percent is also slightly better than that of quarter one and reached 20.25 billion NT. We have been controlling our operating expenses amidst of the current semiconductor downturn. So the current operating expenses in Q2 remain flattish at $5.7 billion compared to $5.78 in Q1 2023. Operating income reached $15.6 billion or 27.8% operating profit margins. Net non-operating income in the second quarter reached 2.8 billion, mainly coming from expenses, interest gains, as well as some investment income from our affiliate companies. After income tax of 2.588 billion NT, our net income attributable to the shareholder of the parent is around 15.6 billion, or 27.8 percent, percentage point. EPS was 1.27 in the second quarter. On page six, this first six-month comparison, revenue declined 18.4 percent to 110.5 billion NT. And the gross margin rate was around 35.7 percent. or 39.4 billion NT. Net income in the first half of 2023 was 32.2 billion, and net income rate was 29.2%. EPS in the first half of 2023 was $2.5820 per share. So on page 7 is our balance sheet at the end of June 30th. Cash on hand is around 163 billion NT, and total equity for the company is 326.9 billion. On page A, as we mentioned, the blended ASP benefits from a better product mix. In a way, it's also a lower utilization rate in 8-inch wafer capacity. So ASP in the second quarter aged up a couple percentage points. compared to the previous quarter. On page nine, revenue rebounded for our Asian customers in the second quarter, and now reach about 56% of the total pie, compared to 50% in the first quarter. And North America declined from 31% in Q1 to 27% in Q2. On page 10, IDN declines slightly to 21%, and Fabulous accounts for 79% of the total revenue in the second quarter of 23. On page 11, the revenue breakdown by application didn't change much. Communication remained the same. Computer remained the same. Consumer increased by 2 percentage points to 26%. On page 12, due to our newly ramped capacity becoming available in our P6 in Tainan FAB, our 20 to 28 nanometer revenue continued to rise. Now it's around 29% of the total revenue. 14 nanometer is about 12% declined by 3 percentage points from the previous quarter. On page 13 is our capacity, quarterly capacity breakdown. We will continue to see some mile increase coming out of our 12A, our P6 expansion in Q3. So the last page of my presentation is on fund capital expenditure plan for 2023. For the time being, it still remains at 3 billion U.S. dollars for the 2023 budget. So the above is a summary of UMC results for second 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, Mr. Jason Wong.