UMC Reports Fourth Quarter 2012 Results Company to enhance advanced processes and long-term competitiveness

TAIPEI, Taiwan, Feb. 6, 2013 /PRNewswire/ --

Fourth Quarter 2012 Overview[Note 1]:

  • Revenue: declined 8.5% QoQ to NT$26.09 billion (US$898.66 million)
  • Gross margin: 16.8%; operating margin: 3.7%
  • Capacity utilization: 80%
  • Net income: NT$1.17 billion (US$40.41 million)
  • Earnings per share: NT$0.09; earnings per ADS: US$0.016

Note 1: 

Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with ROC GAAP, which differ in some material respects from generally accepted accounting principles in the United States.  They are un-audited, unconsolidated, and represent comparisons among the three-month period ending Dec 31, 2012, the three-month period ending Sep 30, 2012, and the equivalent three-month period that ended Dec 31, 2011.  For all 4Q12 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the Dec 31, 2012 exchange rate of NT$29.03 per U.S. Dollar.

United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) ("UMC" or "The Company"), a leading global semiconductor foundry, today announced its unconsolidated operating results for the fourth quarter of 2012.

Revenue was NT$26.09 billion, an 8.5% quarter-over-quarter decrease from NT$28.53 billion in 3Q12, and a 6.8% year-over-year increase from NT$24.43 billion in 4Q11.  Gross margin was 16.8%, operating margin was 3.7%, net income was NT$1.17 billion, and earnings per ordinary share were NT$ 0.09.  In 2012, revenue for the full year was NT$106.00 billion, with NT$9.08 billion operating income, NT$7.92 billion net income and NT$0.63 earnings per share.

Mr. Po-Wen Yen, UMC's newly appointed CEO, said, "In 4Q 2012, both UMC's revenue and gross profit were in line with expectations.  Quarter-over-quarter revenue decline was primarily attributed to decreased wafer shipments.  A total of 1.07 million 8-inch equivalent wafers were shipped, with overall capacity utilization at 80%.  Due to the impact from declining wafers shipments and currency appreciation, gross margin for the quarter was 16.8%.  Revenue contribution from 40nm continued its sequential increase to 15%, reaching our internal target."

CEO Yen continued, "As industry competition intensifies, the bar has been raised with regard to customer expectations for leading-edge technology products' time to market and foundry service flexibility.  As UMC's newly appointed CEO, my first priority is to enhance R&D for advanced processes.  In order to realize maximum benefits from our R&D efforts, we will increase internal resources while leverage outside collaboration so that we may effectively integrate R&D with manufacturing to ensure timely delivery of key projects.  For example, UMC's FinFET development began in 2010, and was bolstered in 2012 through a cooperative licensing agreement with IBM for their fundamental FinFET technology.  Our FinFET development team has since been making good progress.  Meanwhile, UMC recently demonstrated the world's first TSV-enabled 3DIC chip stacking technology developed under an open ecosystem collaboration.  The 3DIC, developed with an OSAT partner, reached a major milestone by passing package-level reliability assessment.  This successful collaboration reaffirms our strong commitment to elevating technology capabilities in order to fulfill the promise of providing high value-added services to customers.  UMC's operating results can be further enhanced through management's team effort to increase capacity, control cost, and expand our customer base.   Although UMC's 28nm ramp has been slower than anticipated, we remain dedicated to advanced technology development and timely capacity deployment to serve our customers' needs.  Equally important is our customers' unwavering commitment to bringing their new and existing 28nm products to fruition at UMC."      

CEO Yen added, "In the short-term, we continue to see elevated demand uncertainty from customers, along with supply chain inventory that will need additional time to digest.  When demand recovers, we are optimistic about the growth momentum from the strong mobile communications segment.  2013 is a critical year for UMC to demonstrate continuous success. In addition to acquiring Hejian Technology's operation, which will help UMC expand in the China market and broaden the company's operating scale, we will continue to invest appropriate capex to further our advanced process R&D and expand leading-edge capacity.  These endeavors will help expedite company growth and strengthen competitiveness to enhance UMC and its customers' overall value while increasing shareholders' equity."  

Summary of Operating Results

Operating Results

(Amount: NT$ million)

4Q12

3Q12

QoQ %
change

4Q11

YoY %
change

Revenue

26,088

28,525

(8.5)

24,425

6.8

Gross Profit

4,372

6,850

(36.2)

4,550

(3.9)

Operating Expenses

(3,409)

(3,238)

5.3

(3,710)

(8.1)

Operating Income

963

3,612

(73.3)

840

14.6

Non-Operating Income

391

83

371.1

149

162.4

Net Income

1,173

2,417

(51.5)

980

19.7

EPS   (NT$ per share)

0.09

0.19


0.08


         (US$ per ADS[Note 2])

0.016

0.033


0.014


Note 2: One ADS represents five Taiwan-listed ordinary shares.

Revenue decreased 8.5% QoQ to NT$26.09 billion from NT$28.53 billion in 3Q12, and increased 6.8% YoY from NT$24.43 billion in 4Q11.  Gross profit was NT$4.37 billion, or 16.8% of revenue, compared to NT$6.85 billion, or 24.0% of 3Q12 revenue.  Operating income for the quarter was NT$963 million, or 3.7% of revenue, compared to NT$3.61 billion, or 12.7% of 3Q12 revenue.  Net income in 4Q12 was NT$1.17 billion, compared to NT$2.42 billion in 3Q12.

Earnings per ordinary share for the quarter were NT$0.09.  Earnings per ADS were US$0.016.  The basic weighted average number of outstanding shares in 4Q12 was 12,635,635,936, compared with 12,628,658,938 shares in 3Q12 and 12,609,375,064 shares in 4Q11.  The diluted weighted average number of outstanding shares was 13,321,721,668 in 4Q12, compared with 13,309,367,195 shares in 3Q12 and 13,319,535,653 shares in 4Q11.  The fully diluted share count on December 31, 2012 was approximately 14,062,286,000.  On December 31, 2012, UMC held 300 million treasury shares acquired from the 14th share buy-back programs.

Detailed Financials Section

Revenue decreased 8.5% QoQ to NT$26.09 billion from NT$28.53 billion in 3Q12, mainly due to decrease in shipment quantity.  Gross profit was NT$4.37 billion, or 16.8% of revenue, compared to NT$6.85 billion, or 24.0% of 3Q12 revenue due to shipment decline and currency appreciation.  Sales and Marketing expenses decreased to NT$323 million due to a reversal of bad debt expenses from customers.  Research and development expenses increased to NT$2.49 billion in 4Q, mainly due to the increase in R&D wafers and masks for advanced process nodes.  The total R&D expense was 9.5% of revenue in 4Q12.

COGS & Expenses

(Amount: NT$ million)

4Q12

3Q12

QoQ %
change

4Q11

YoY %
change

Revenue

26,088

28,525

(8.5)

24,425

6.8

COGS

(21,716)

(21,675)

0.2

(19,875)

9.3

  Depreciation

(6,841)

(7,122)

(3.9)

(6,800)

0.6

  Other Mfg. Costs

(14,875)

(14,553)

2.2

(13,075)

13.8

Gross Profit

4,372

6,850

(36.2)

4,550

(3.9)

Gross Margin (%)

16.8%

24.0%


18.6%


Total Operating Exp.

(3,409)

(3,238)

5.3

(3,710)

(8.1)

  G&A

(598)

(515)

16.1

(601)

(0.5)

  Sales & Marketing

(323)

(504)

(35.9)

(822)

(60.7)

  R&D

(2,488)

(2,219)

12.1

(2,287)

8.8

Operating Income

963

3,612

(73.3)

840

14.6

Net non-operating income during 4Q12 increased QoQ to NT$391 million.  Net investment loss was NT$1.04 billion, losses were primarily due to UMC Japan and solar business operations.  Gain on disposal of investment mainly came from conversion of Novatek exchangeable bonds.  The gain from other items mainly composed of gain on redemption of bonds payable and loss from valuation of financial liabilities.

Non-Operating Income (Expenses)

(Amount: NT$ million)

4Q12

3Q12

4Q11

Net Non-Operating Income

391

83

149

Net Interest Income (Loss)

(54)

(37)

(7)

Net Investment Loss

(1,041)

(1,068)

(1,485)

Gain (Loss) on Disposal of Investment

1,493

1,544

2

Exchange Gain (Loss)

(60)

(0)

45

Other Gain (Loss)

53

(356)

1,594

Operating cash inflow was NT$11.60 billion. Free cash flow for 4Q12 was negative NT$544 million, as CAPEX spending for the quarter was NT$12.14 billion.  The NT$466 million of financing cash inflow was mainly from the increase of bank loans.  Net cash outflow was NT$293 million in 4Q12.

Cash Flow Summary

(Amount: NT$ million)

For the 3-Month Period

Ended Dec. 31, 2012

For the 3-Month Period

Ended  Sep. 30, 2012

Cash Flow from Operations

11,599

10,184

  Net Income

1,173

2,417

  Depreciation & Amortization

8,791

8,605

  Changes in Working Capital

881

(1,920)

  Other

754

1,082

Cash Flow from Investing

(12,170)

(9,138)

  Capital Expenditures

(12,143)

(11,692)

Liquid of Investment

14

674

  Other

(41)

1,880

Cash Flow from Financing

466

(5,247)

  Bank Loans

571

904

Bonds Issued

-

(4)

Cash Dividends

-

(6,316)

Reacquisition of ECB

(139)

-

  Other

34

169

Effect of Exchange Rate

(188)

(314)

Net Cash Flow

(293)

(4,515)

Current assets decreased to NT$65.22 billion, mainly due to decrease in financial assets resulting from exchangeable bond holders exercising their exchange rights.  The three-day increase from inventory turnover days resulted from higher raw material levels from increasing customers' demand at leading-edge nodes.

Current Assets

(Amount: NT$ billion)

4Q12

3Q12

4Q11

Cash & Cash Equivalents

31.76

32.05

30.83

Notes & Accounts Receivable

14.11

15.90

12.50

  Days Sales Outstanding

52

51

49

Inventories

11.85

11.36

10.48

  Avg. Inventory Turnover

50

47

51

Total Current Assets

65.22

68.31

60.77

Total current liabilities decreased to NT$29.27 billion in 4Q12, attributed to the payment on equipment, which consequently resulted in a drop in debt to equity ratio to 31% in 4Q.

Liabilities

(Amount: NT$ billion)

4Q12

3Q12

4Q11

Total Current Liabilities

29.27

35.07

31.75

  Accounts Payable

4.98

5.25

4.00

  Short-Term Credit / Bonds

8.15

9.30

10.43

  Payable on Equipment

4.13

8.76

6.72

  Other

12.01

11.76

10.60

Long-Term Liabilities

28.89

28.37

15.20

Total Liabilities

61.79

67.02

50.56

Debt to Equity

31%

33%

24%

Analysis of Revenue[Note 3]

Note 3:

Revenue in this section represents wafer sales.


The percentage of revenue from Asia Pacific increased to 45%, reflecting the relative strength of Asia Pacific based consumer and communication customers.  

Revenue Breakdown by Region

Region

4Q12

3Q12

2Q12

1Q12

4Q11

North America

45%

50%

45%

45%

47%

Asia Pacific

45%

40%

46%

46%

43%

Europe

9%

9%

8%

8%

9%

Japan

1%

1%

1%

1%

1%

Revenue contribution from 40nm and below grew from 13% in 3Q12 to 15% in 4Q12, reaching the company's year-end internal target.

Revenue Breakdown by Geometry

Geometry

4Q12

3Q12

2Q12

1Q12

4Q11

40nm and below

15%

13%

9%

9%

8%

40nm<x<=65nm

40%

41%

40%

40%

41%

65nm<x<=90nm

7%

7%

7%

6%

6%

90nm<x<=0.13um

15%

15%

18%

20%

23%

0.13um<x<=0.18um

10%

9%

10%

10%

10%

0.18um<x<=0.35um

10%

11%

11%

11%

9%

0.5um and above

3%

4%

5%

4%

3%

The percentage of revenue from Fabless and IDM customers were 90% and 10% respectively for 4Q.

Revenue Breakdown by Customer Type

Customer Type

4Q12

3Q12

2Q12

1Q12

4Q11

Fabless

90%

83%

82%

80%

79%

IDM

10%

17%

18%

20%

21%

Computer segment showed weakness in 4Q, including demand in display IC.

Revenue Breakdown by Application (1)

Application

4Q12

3Q12

2Q12

1Q12

4Q11

Computer

18%

21%

17%

21%

14%

Communication

50%

49%

54%

49%

60%

Consumer

29%

27%

26%

27%

23%

Others

3%

3%

3%

3%

3%

(1) Computer consists of ICs such as CPU, GPU, HDD controllers, DVD/CD-RW control ICs, PC chipset, audio codec, keyboard controller, monitor scaler, USB, I/O chipset. Communication consists of handset components, broadband, WLAN, bluetooth, Ethernet, LAN, DSP, etc. Consumer consists of ICs used for DVD players, DTV, STB, MP3/MP4, flash controller, game consoles, DSC, smart cards, toys, etc.

Blended Average Selling Price Trend

The blended average selling price (ASP) was flat during 4Q12.

(To view ASP trend, visit http://www.umc.com/english/investors/4Q12_ASP_trend.asp )

Shipment and Utilization Rate[Note 4]

Note 4:

Utilization Rate = Quarterly Wafer Out / Quarterly Capacity


Wafer shipments decreased 5.7% sequentially to 1,069K in 4Q12, compared to  1,133K 8-inch equivalent wafers in 3Q12.  Due to the drop in shipment quantity and total capacity being at a larger level, overall utilization rate for the quarter declined slightly to 80%. 

Wafer Shipments


4Q12

3Q12

2Q12

1Q12

4Q11

Wafer Shipments
(8" K equivalents)

1,069

1,133

1,142

963

915


Quarterly Capacity Utilization Rate


4Q12

3Q12

2Q12

1Q12

4Q11

Utilization Rate

80%

84%

84%

71%

68%

Total Capacity
(8" K equivalents)

1,401

1,376

1,372

1,364

1,376

Capacity[Note 5]

Note 5:  

Estimated capacity numbers are based on calculated maximum output rather than designed capacity. The actual capacity numbers may differ depending upon equipment delivery schedules, pace of migration to more advanced process technologies, and other factors affecting production ramp-up.


Capacity during the fourth quarter was 1,401K 8-inch equivalent wafers.  The estimated capacity for the first quarter will increase to 1,461K 8-inch equivalent wafers as Fab8N's capacity will be included starting from February, 2013.   

Annual Capacity in

thousands of wafers


Quarterly Capacity in

thousands of wafers

FAB

Geometry
(um)           

2012

2011

2010

2009


FAB        

1Q13E

4Q12

3Q12

2Q12

Fab6A

6"

3.5 - 0.45

481

538

588

583


Fab6A

113

113

123

123

Fab8A

8"

0.5 - 0.25

815

813

816

816


Fab8A

201

204

204

204

Fab8C

8"

0.35 - 0.11

360

359

366

405


Fab8C

86

90

90

90

Fab8D

8"

0.13 - 0.09

371

364

314

267


Fab8D

94

93

93

93

Fab8E

8"

0.5 - 0.18

449

469

410

408


Fab8E

103

113

113

113

Fab8F

8"

0.18 - 0.11

389

388

388

381


Fab8F

96

98

98

98

Fab8S

8"

0.18 - 0.11

348

307

304

300


Fab8S

83

87

87

87

Fab12A

12"

0.18 - 0.028

579

501

374

385


Fab8N(2)

83

-

-

-

Fab12i

12"

0.13 - 0.040

537

530

454

362


Fab12A

158

156

143

141

Total(1)

5,514

5,322

4,791

4,586


Fab12i

132

134

134

134

YoY Growth Rate

4%

11%

4%

2%


Total

1,461

1,401

1,376

1,372

(1)One 6-inch wafer is converted into 0.5625(6 square/8 square) 8-inch equivalent wafer; one 12-inch wafer is converted into 2.25(12 square/8 square) 8-inch equivalent wafers. Capacity total figures are expressed in 8-inch equivalent wafers.

(2) Fab8N's capacity will be included starting February, 2013.

CAPEX

The total capital expenditure for 2012 was US$1.7 billion.  The foundry capital expenditure budget for 2013 is expected to be approximately US$1.5 billion.  94% of the amount will be used for 12" advanced capacity expansion.

UMC Capital Expenditure by Year - in US$ billion

Year

2012

2011

2010

2009

2008

CAPEX

$ 1.7

$ 1.6

$ 1.8

$ 0.55

$ 0.35


2013 Foundry CAPEX Plan

8"

12"

Total

6%

94%

Approximately US$1.5 billion

Brief Summary of Full Year 2012 Results

  • Revenue increased 0.1% YoY to NT$106.00 billion from NT$105.88 billion in 2011.
  • Gross profit margin was 21.2%, compared to 22.7% in 2011.
  • Operating profit margin was 8.6%, compared to 9.6% in 2011.
  • Net income was NT$7.92 billion for 2012.
  • EPS was NT$0.63, or EPADS was US$0.109 for 2012, compared to EPS of NT$0.84 or EPADS of US$0.145 for 2011.
  • The percentage of revenue from 40nm and below technologies increased from 6% in 2011 to 11% in 2012.  Percentage of revenue from 65nm and below technologies accounted for 52% in 2012.

Operating Results

(Amount: NT$ million)

2012

2011

YoY %
change

Revenue

105,998

105,880

0.1

Gross Profit

22,512

23,995

(6.2)

Operating Expenses

(13,431)

(13,857)

(3.1)

Operating Income

9,081

10,138

(10.4)

Non-Operating Income

904

1,228

(26.4)

Income Tax Expenses

(2,070)

(756)

173.8

Net Income

7,915

10,610

(25.4)

EPS   (NT$ per share)

0.63

0.84


         (US$ per ADS)

0.109

0.145



Annual Sales Breakdown in Revenue

Region

2012

2011

North America

46%

49%

Asia Pacific

45%

39%

Europe

8%

11%

Japan

1%

1%




Technology

2012

2011

40nm and below

11%

6%

40nm<x<=65nm

41%

33%

65nm<x<=90nm

7%

11%

90nm<x<=0.13um

17%

24%

0.13um<x<=0.18um

10%

12%

0.18um<x<=0.35um

10%

9%

0.5um and above

4%

5%




Customer Type

2012

2011

Fabless

84%

75%

IDM

16%

25%




Application

2012

2011

Computer

19%

15%

Communication

50%

55%

Consumer

27%

27%

Others

4%

3%

First Quarter of 2013 Outlook & Guidance

Quarter-over-Quarter Guidance:

  • Foundry Segment Wafer Shipment: To increase by approximately 6%
  • Foundry Segment ASP in US$: To decrease by approximately 6%
  • Foundry Segment Profitability: Operating margin to be approximately break-even
  • Foundry Segment Capacity Utilization: Approximately 75%
  • 2013 Foundry CAPEX Budget: US$1.5bn
  • Guidance to Non-Operating Income and New Business Segment:
    • Non-Operating Income after-tax to be approximately US$100mn +
    • New Business Segment revenue to be approximately NT$2bn, and operating margin to be in loss of approximately NT$1bn 

Recent Developments / Announcements

Jan. 29, 2013

STATS ChipPAC and UMC Unveil World's First 3D IC Developed Under An Open Ecosystem Model

Jan. 22, 2013

Faraday and UMC Deliver 300 Million Gate 40nm Customer SoC

Jan. 15, 2013

UMC Introduces Thick Plated Copper Process For Monolithic PMIC Applications

Dec. 26, 2012

UMC Receives ICP Certification From The Bureau of Foreign Trade

Dec. 18, 2012

UMC Achieves Foundry's First 55nm SDDI Customer Product Tape-out

Nov. 21, 2012

UMC Unveils 80nm SDDI Foundry Process Featuring The Industry's Most Competitive SRAM Bitcell

Nov. 19, 2012

UMC Restructures Executive Team

Oct. 31, 2012

UMC 3Q 2012 Financial Results

Please visit UMC's website for further details regarding the above announcements

Conference Call / Webcast Announcement

Wednesday, February 06, 2013

Time:       

9:00 PM (Taipei) / 8:00 AM (New York) / 1:00 PM (London)


Dial-in numbers and Access Codes:

USA Toll Free:

1866 519 4004

UK Toll Free:

0808 234 6646

Singapore and Other Areas:   

+65 6723 9381


Access Code:

UMC

A live webcast and replay of the 4Q12 results announcement will be available at www.umc.com under the "Investor Relations \ Investor Events" section.

About UMC

UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor foundry that provides advanced technology and manufacturing for applications spanning every major sector of the IC industry. UMC's customer-driven foundry solutions allow chip designers to leverage the company's leading-edge processes, which include 28nm poly-SiON and gate-last High-K/Metal Gate technology, mixed signal/RFCMOS, and a wide range of specialty technologies. Production is supported through 10 wafer manufacturing facilities that include two advanced 300mm fabs; Fab 12A in Taiwan and Singapore-based Fab 12i. Fab 12A consists of Phases 1-4 which are in production for customer products down to 28nm. Construction is underway for Phases 5&6, with future plans for Phases 7&8. The company employs over 13,000 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at http://www.umc.com.

Note from UMC Concerning Forward-Looking Statements

Some of the statements in the foregoing announcement are forward looking within the meaning of the U.S.  Federal Securities laws, including statements about future outsourcing, wafer capacity, technologies, business relationships and market conditions.  Investors are cautioned that actual events and results could differ materially from these statements as a result of a variety of factors, including conditions in the overall semiconductor market and economy; acceptance and demand for products from UMC; and technological and development risks.  Further information concerning these risks is included in UMC's filings with the U.S. SEC, including on Form F-1, F-3, F-6 and 20-F, each as amended.

Safe Harbor Statements

This release contains forward-looking statements.  These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995.  You can identify these forward-looking statements by use of words such as "strategy," "expects," "continues," "plans," "anticipates," "believes," "will," "estimates," "intends," "projects," "goals," "targets" and other words of similar meaning.  You can also identify them by the fact that they do not relate strictly to historical or current facts.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual performance, financial condition or results of operations of UMC to be materially different from what is stated or may be implied in such forward-looking statements.  Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, but not limited to: (i) our dependence upon the frequent introduction of new services and technologies based on the latest developments in our industry; (ii) the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; (iii) the risks associated with international global business activities; (iv) our dependence upon key personnel; (v) general economic and political conditions; (vi) possible disruptions in commercial activities caused by natural and human-induced events and disasters, including terrorist activity, armed conflict and highly contagious diseases; (vii) reduced end-user purchases relative to expectations and orders; and (viii) fluctuations in foreign currency exchange rates.  Further information regarding these and other risks is included in UMC's filings with the U.S. Securities and Exchange Commission, including its registration statements on Form F-1, F-3, F-6 and 20-F, in each case as amended. UMC does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

The financial statements included in this release are unaudited and unconsolidated, and prepared and published in accordance with ROC GAAP.  Investors are cautioned that there are many differences between ROC GAAP and US GAAP.

This presentation is not an offer of securities for sale in the United States.  Securities may not be offered or sold in the United States absent registration or an exemption from registration.  Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

- FINANCIAL TABLES TO FOLLOW -