United Microelectronics Corporation (NEW)

Welcome everyone to UMC's 2024 first 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 the 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, under the Investor Relations, Investors, Events section. And now I would like to introduce Mr. Michael Ling, Head of Investor Relations at UMC. Mr. Ling, please begin.

Thank you, and welcome to UMC's conference call for the first quarter of 2024. I'm joined by Mr. Jason Wong, President of UMC. and Mr. Chi-Dung Liu, 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 2024 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.usc.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 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 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 first quarter 2024 financial result.

Thank you, Michael. I'd like to go through the first quarter of 2024 investor conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page four, the first quarter of 2024, consolidated revenue was $54.63 billion, with gross margin at 30.9%. The net income attributable to the stockholder of the parent was 10.46 billion NT, and the earnings per ordinary shares were 0.84 NT dollars. Utilization rate in first quarter of 24 was 65%, similar to 66% in Q4 of last year. However, the shipment has increased by about 4.5%. On page five, for the sequential financial comparison, revenue declined slightly to 54.6 percent, sorry, 54.6 billion NT dollars. Gross margin was down 5.1 percent to 30.9 percentage point, or 16.899 billion NT. The operating expenses normally in first quarter is a seasonal low point. Therefore, we can see the operating expenses was down 13.4% to 5.7 billion NT in Q124. And our other operating income mainly is subsidies from government decline quite a bit to 513 million NT in Q1. This is largely coming from our shaman operation. Their government subsidies recognition is in line with their depreciation curve, which has come down significantly in 2024. And overall net income attributable to the shareholder of the parent was $10.4 billion in Q1 versus $13.1 billion in Q4 of last year. EPS was 0.84 for the first quarter. On page six, the year-over-year comparison, revenue also stayed similar range, almost slight increase of 0.8 percent. Gross margin, however, declined from 35.5 percentage point to 30.9 percentage point in Q1, mainly due to increasing costs, such as depreciation expenses. And for the non-operating income, there's also a big difference, mainly due to our portfolio holdings, investment holdings. This is the mark-to-mark again. only about $1 billion in Q1 versus $4.6 billion in the same period of last year. On page seven, our cash is now about $119 billion NT, and our total equity is $378 billion NT. Most of the increase is in the PP&E, property plan and equipment, which right now stand at On page 8, there's a one-time annual adjustment in our ASP in Q1 of 2024, which are also the main reason offset the 4 to 5 percent increase in weight for shipment in Q1. So, the magnitude is quite similar to that in first quarter ASP. On page 9, The original breakdown of our revenue stayed relatively similar quarter over quarter. Europe declined 3 percent from 11 percent in Q4 last year to 8 percent in first quarter this year. On the next page, page 10, there's also a big change in the IDM composition versus fabulous revenue. So, this quarter is 18 percent versus 82 percent, while last quarter was 22 percent versus 78 percent. On page 11, the application breakdown remained relatively stable. On page 12, we see a seasonal downward adjustment in some of our customers, which lead to a small decrease in our 2022-2028 revenue percentage point. of 33 percent, and the rest of the technology geometries are relatively stable. On page 13, our capacity breakdown in 12-inch equivalent capacity, most of the increase is coming from 12A in our Tainan Z, which is our P6 expansion. and there will be some spotty areas of efficiency improvement for some of our other FABs. Total 12-inch equivalent capacity is 1.2 million in Q1 this year. Our CAPEX for after first quarter remain unchanged, still stay around 3.3 billion cash-based CAPEX for 2024. Majority of that will be attributed to 12-inch capacity expansion. So the above is a summary of UMC results for Q1 2024. 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. Jason Wong Thank you, Qigong.