United Microelectronics Corporation (NEW)

Welcome everyone to UMC's 2023 fourth quarter earnings conference call. All lines have been placed and moved 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. 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 fourth quarter of 2023. I'm joined by Mr. Jason Wong, the President of UMC. and Mr. Chi-Dong Liu, the CFO of UNC. In a moment, we will hear our CFO present the fourth quarter financial results, followed by our president's key message to address UNC's focus and the first quarter of 2024 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 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 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 Authority. 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 fourth quarter 2023 financial results.

Thank you, Michael. I'd like to go through the 4Q23 investor conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page 4, the fourth quarter of 2023, consolidated revenue was $54.96 billion NT, with gross margin at 32.4%. Net income attributable to the stockholder of the parent was $13.2 billion NT. Earnings per ordinary shares were 1.06 NT dollars in Q4 2023. On page five, this is the sequential performance. Revenue declined 3.7 percent quarter over quarter to 54.9 billion. Cost margin rate dropped roughly 3.5 percent, percentage point, to 32.4 percent or 17.8 billion NT dollars. With a net non-operating income of 2.22 billion NT, the net income comes to 13.19 billion NT, or EPS of 1.06. This is compared to 1.29 in the previous quarter of 2023. For year-over-year comparison on page six, Revenue declined roughly by 20% year-over-year to $222 billion. This is largely due to the lower capacity utilization rate. I saw wafer shipment decline roughly 27% year-over-year from 2022 to 2023. Gross margin rate as a result declined from 45.1% in 2022 to 34.9% in 2023. Overall EPA net earnings in 2023 was $50.99, or close to $61 billion NT. Net income rate was 27.4%. compared to 31.3% in the year of 2022. EPS as a result is 4.93 in 2023, compared to 7.09 in 2022. So on page seven, our cash on hand is still around 132 billion NT, and total equity of the company has come to 359.5 billion NT. Hook value per share is close to $29 per share at the end of 2023. On page A, starting from 2024, we have changed our ASP unit as well as capacity unit to 12-inch and 12-inch equivalent to express the ASP number as well as the capacity number. So, for the past five quarters, you can see the trend chart here. The first three quarters was edging up, and the last two quarters was relatively firm on a 12-inch wafer equivalent ASB trend. So, on page nine, for the revenue breakdown by geography, Asia is getting a little bit bigger to 62 percent of our total revenue. when North America is about 23% of our total revenue. For year-over-year comparison on page 10, Asia actually declined from 51% in 2022 to 57% in 2023. And the rest of the three main regions didn't change much. On page 11, IDM continued to increase HR to 22%, and Fabless is around 78% in Q4 of 2023. On our year-over-year comparison on page 12, the increase in IDM is more notable, from 15% in 2022 to 2023 of 22%. And in terms of application breakdown on page 13, communication remained the biggest of 47%. And the spread among different applications didn't change much in quarter over quarter. As for year over year change, computer declined from 15% in 2022 to 11% in 2023. And we continue to see bigger exposure to other segments, which is mostly automotive and industrial, around 20%, compared to 14% in the previous year. For technology breakdown, we are happy to see that revenue come from 40 nanometer and below now represent 50% of our total revenue. And this is compared to about 45% in the previous quarter. And 22 and 28 is our largest share of revenue, around 36% in the Q4 of 23. For the four-year numbers, the trend is also similar. We see the 22-28 revenue of 31% compared to 24% in the previous year. On page 17, as I mentioned earlier, the unit of capacity wafer also changed to 12-inch equivalent. Right now, our quarterly available capacity is a bit over 1.2 million per quarter in terms of 12-inch equivalent capacity. And we will continue to see some minor increase out of our 12A capacity. given our PC expansion is continuing. On the last page of my presentation, KPAX for 2024 is currently budget at $3.3 billion. With majority of that, over 95% goes to 12-inch capacity expansion in both Tainan and also Singapore. The above is a summary of UMC's results for Q4 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.