Taipei: A magnitude 6.4 earthquake that struck southern Taiwan early Tuesday morning, coupled with a decline in product prices, could potentially cause United Microelectronics Corp.'s (UMC) gross margin to dip below 30% in the first quarter of this year, according to a company official. UMC, the second largest contract chipmaker in Taiwan, experienced disruptions in its operations at the Southern Taiwan Science Park in Chiayi County, necessitating the evacuation of its employees from the site.
According to Focus Taiwan, UMC's co-President Jason Wang highlighted at an investor conference that the earthquake's impact, along with a 4-6% average fall in product prices, is likely to drag down the company's gross margin from the 30.4% reported in the previous quarter. Despite this anticipated decline, Wang expressed optimism that the first quarter gross margin would remain above 25%.
During the same investor conference, UMC reported a significant 41.3% decline in net profit from the previous quarter, with earnings dropping to NT$8.497 billion (approximately US$259 million) in the fourth quarter of 2024. Earnings per share (EPS) also fell, reaching NT$0.68 compared to NT$1.16 in the third quarter.
For the year 2024, UMC's net profit totaled NT$47.21 billion, marking a 22.6% decrease from the previous year, with EPS at NT$3.80 down from NT$4.93 in 2023. However, the company's consolidated sales for 2024 saw a 4.4% increase from the prior year, amounting to NT$232.30 billion, despite a 2.3 percentage point drop in gross margin to 32.6%.
Wang noted that steady demand for chips used in communications, consumer electronics, and computers contributed to UMC's sales growth in 2024. Notably, chips manufactured using 28-nanometer and 22-nanometer technologies accounted for 34% of the company's total sales.
Looking ahead to 2025, Wang projected that the global semiconductor industry would benefit from robust demand for artificial intelligence servers, alongside an anticipated increase in chip shipments for smartphones and computers, thus boosting the IC industry. He predicted a 10% growth in industry sales this year.
In terms of UMC's specialized mature IC segment, Wang forecasted a 1-3% sales increase in 2025, with the 22nm technology expected to contribute more significantly to the company's sales. For the first quarter of this year, UMC's capacity utilization rate is anticipated to approach 70%, with wafer shipments likely remaining stable compared to the previous quarter.
UMC's capital expenditure for 2025 is projected to be US$1.8 billion, reflecting a 38% decrease from US$2.9 billion in 2024. Additionally, a new facility in Singapore is scheduled to begin commercial production in 2026, with production volume adjustments based on client demand, as outlined by Wang.
In February 2022, UMC announced a US$5 billion investment in the phase three expansion of its Fab12i in Singapore, identifying it as one of the most advanced semiconductor fabs in the country. The facility is set to produce chips using UMC's 22nm and 28nm processes upon completion.