United Microelectronics Corp
NYSE:UMC
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Intrinsic Value
The intrinsic value of one UMC stock under the Base Case scenario is 9.62 USD. Compared to the current market price of 8.45 USD, United Microelectronics Corp is Undervalued by 12%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
United Microelectronics Corp
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Fundamental Analysis
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United Microelectronics Corporation (UMC) stands as a formidable player in the global semiconductor industry, with a legacy that stretches back to its founding in 1980. Headquartered in Hsinchu, Taiwan, UMC operates as a pure-play foundry, focusing on the manufacturing of integrated circuits for various applications, from consumer electronics to automotive systems. The company has partnered with numerous technology giants, enabling it to leverage cutting-edge processes and design capabilities. With a strong commitment to research and development, UMC continually enhances its production technology, aiming to meet the evolving demands of the market and capitalize on the growth of sectors like...
United Microelectronics Corporation (UMC) stands as a formidable player in the global semiconductor industry, with a legacy that stretches back to its founding in 1980. Headquartered in Hsinchu, Taiwan, UMC operates as a pure-play foundry, focusing on the manufacturing of integrated circuits for various applications, from consumer electronics to automotive systems. The company has partnered with numerous technology giants, enabling it to leverage cutting-edge processes and design capabilities. With a strong commitment to research and development, UMC continually enhances its production technology, aiming to meet the evolving demands of the market and capitalize on the growth of sectors like 5G, Internet of Things (IoT), and artificial intelligence.
Investors may find UMC an intriguing opportunity, given its strategic positioning in an industry characterized by high barriers to entry and continuous innovation. The company’s focus on advanced manufacturing processes, including a growing portfolio of 28nm and below nodes, is critical as it caters to the increasing demands for high-performance and energy-efficient chips. Recent diversification efforts into specialty technologies, such as high-voltage and radio-frequency processes, further position UMC as a versatile partner for its clients. With a robust financial foundation and a commitment to sustainable practices, UMC not only aims to capture a larger market share but also to deliver value to its shareholders amidst the dynamic landscape of global technology.
United Microelectronics Corporation (UMC) is a leading global semiconductor foundry based in Taiwan. Its core business segments primarily revolve around various semiconductor manufacturing services and technologies. Here are the main segments:
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Foundry Services: UMC specializes in offering wafer fabrication services for a broad range of applications. This includes the production of integrated circuits (ICs) for customers across various markets, such as consumer electronics, automotive, telecommunication, and industrial applications.
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Technologies Offered: UMC provides a range of process technologies, including:
- Logic ICs: Services for applications in consumer electronics and computer products.
- RF (Radio Frequency) Technologies: Catering to customers in wireless communication and IoT (Internet of Things) sectors.
- Mixed-Signal ICs: Ideal for applications requiring both analog and digital processing.
- Power Management ICs: Focused on energy efficiency in various electronic devices.
- Embedded Non-Volatile Memory: For products that require low power and high performance.
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Advanced Technologies: UMC has been investing in advanced nodes such as 28 nm, 22 nm, 14 nm, and below, which target high-performance computing, mobile devices, and data center applications.
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Automotive Electronics: As automotive technology evolves towards electric and autonomous vehicles, UMC is expanding its capabilities in producing specialized chips that meet automotive standards, which require higher reliability and performance.
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Collaborative Partnerships: UMC engages in collaborations with various tech firms and research institutions to enhance its technology offering and to support specialized industry needs.
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Customer Segments: UMC serves a diverse clientele, including fabless companies, system companies, and integrated device manufacturers (IDMs) globally, providing tailored solutions based on specific customer requirements.
These core business segments enable UMC to maintain a competitive edge in the semiconductor industry while responding to evolving market demands and technological advancements.
United Microelectronics Corporation (UMC) possesses several unique competitive advantages that help it stand out in the semiconductor manufacturing industry:
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Specialization in Specialty Processes: UMC focuses on specialty foundry services, catering to niche markets such as RF, analog, and mixed-signal applications. This expertise allows it to leverage higher margins compared to competitors that may focus more broadly on standard semiconductor processes.
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Strong Partnerships and Collaborations: UMC collaborates with various technology and design partners, allowing it to stay at the forefront of technological advancements. These partnerships can yield synergies that enhance product offerings and improve manufacturing efficiencies.
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Established Client Base: With a long-standing presence in the market, UMC has built a loyal and diverse customer base, ranging from fabless companies to industrial customers. This broad clientele reduces dependency on any single customer and enhances revenue stability.
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Cost Efficiency and Operational Excellence: UMC has implemented advanced production techniques and lean manufacturing practices that improve cost efficiencies. This allows the company to offer competitive pricing without compromising on quality.
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Strategic Geographic Location: UMC's manufacturing facilities are strategically located in regions that facilitate access to key markets and a skilled workforce. This geographic advantage can reduce logistics costs and lead times.
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Sustainability Initiatives: UMC places a strong emphasis on sustainable practices, including energy efficiency and waste reduction. This focus not only meets regulatory requirements but also appeals to environmentally conscious customers.
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Investment in R&D: Continuous investment in research and development allows UMC to innovate and improve its manufacturing processes and product offerings. This capability ensures that UMC remains competitive in technology and performance.
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Flexibility and Customization: UMC is known for its ability to provide customized solutions tailored to specific customer needs. This flexibility can be a significant advantage in a market that increasingly demands specialized products.
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Robust Quality Assurance Standards: UMC maintains high standards for quality control, which builds trust and reliability among customers. Consistent quality is critical in the semiconductor industry, where defects can have significant repercussions.
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Diverse Product Portfolio: By offering a wide range of semiconductor solutions across different applications, UMC is less vulnerable to market fluctuations in any single product category.
These competitive advantages enable UMC to navigate the dynamic semiconductor landscape effectively and position itself favorably against rivals in the foundry business.
United Microelectronics Corp (UMC), a leading global semiconductor foundry, faces several risks and challenges in the near future:
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Supply Chain Disruptions: Ongoing global supply chain issues, exacerbated by geopolitical tensions and the COVID-19 pandemic, can lead to shortages of raw materials and components, affecting production schedules and costs.
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Competition: UMC faces intense competition from other foundries, particularly TSMC, Samsung, and GlobalFoundries. These competitors may have advanced technology and greater R&D investment, which could impact UMC's market share and profitability.
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Technological Advancements: The semiconductor industry is rapidly evolving. UMC must continue to invest in research and development to keep pace with advancements in technology and to meet the increasing demands for smaller, faster, and more energy-efficient chips.
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Regulatory Challenges: Trade regulations, especially between the U.S. and China, could affect UMC's business operations, given that it has a significant customer base in those regions. Compliance with international trade laws can add complexity and risk.
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Economic Slowdown: A global economic downturn could reduce demand for semiconductors across various sectors, including consumer electronics, automotive, and industrial applications.
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Environmental and Sustainability Issues: Increasing scrutiny on environmental practices means UMC must invest in more sustainable manufacturing processes to comply with regulations and meet investor and consumer expectations.
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Global Semiconductor Demand Fluctuations: UMC's performance is closely tied to market demand for semiconductors. Changes in consumer behavior, technological advancements, or cycles in sectors like automotive and consumer electronics can lead to demand volatility.
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Talent Acquisition and Retention: The semiconductor industry requires a highly skilled workforce. Attracting and retaining talent can be challenging, particularly in a competitive labor market.
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Currency Fluctuations: As an international business, UMC's revenues and costs can be affected by fluctuations in exchange rates, which may impact profitability.
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Cybersecurity Risks: As with all tech companies, UMC is susceptible to cybersecurity threats, which can impact operations, intellectual property, and customer trust.
Navigating these risks will require strategic planning, investment in technology and talent, and proactive engagement with stakeholders to ensure sustainable growth and competitiveness in the semiconductor market.
Revenue & Expenses Breakdown
United Microelectronics Corp
Balance Sheet Decomposition
United Microelectronics Corp
Current Assets | 207.2B |
Cash & Short-Term Investments | 130.7B |
Receivables | 35.3B |
Other Current Assets | 41.2B |
Non-Current Assets | 379.7B |
Long-Term Investments | 78.4B |
PP&E | 285.9B |
Intangibles | 4B |
Other Non-Current Assets | 11.5B |
Current Liabilities | 125B |
Accounts Payable | 8.2B |
Short-Term Debt | 3.1B |
Other Current Liabilities | 113.7B |
Non-Current Liabilities | 106.2B |
Long-Term Debt | 52.8B |
Other Non-Current Liabilities | 53.4B |
Earnings Waterfall
United Microelectronics Corp
Revenue
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223.5B
TWD
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Cost of Revenue
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-148.3B
TWD
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Gross Profit
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75.1B
TWD
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Operating Expenses
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-22B
TWD
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Operating Income
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53.1B
TWD
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Other Expenses
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287.4m
TWD
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Net Income
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53.4B
TWD
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Free Cash Flow Analysis
United Microelectronics Corp
TWD | |
Free Cash Flow | TWD |
In Q2 2024, UMC reported consolidated revenue of TWD 56.8 billion, a 4% increase from the previous quarter. Gross margin improved to 35.2%, aided by a favorable exchange rate and product mix. Wafer shipments rose by 2.5%, and utilization rates improved to 68%. For Q3 2024, UMC expects mid-single-digit growth in wafer shipments, a steady ASP, and a gross margin in the mid-30% range. Capacity utilization is anticipated to reach 70%. Despite cost pressures from rising depreciation and utilities, UMC remains resilient, focusing on advanced technologies to support growth in AI, 5G, and automotive sectors.
What is Earnings Call?
UMC Profitability Score
Profitability Due Diligence
United Microelectronics Corp's profitability score is 61/100. The higher the profitability score, the more profitable the company is.
Score
United Microelectronics Corp's profitability score is 61/100. The higher the profitability score, the more profitable the company is.
UMC Solvency Score
Solvency Due Diligence
United Microelectronics Corp's solvency score is 77/100. The higher the solvency score, the more solvent the company is.
Score
United Microelectronics Corp's solvency score is 77/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
UMC Price Targets Summary
United Microelectronics Corp
According to Wall Street analysts, the average 1-year price target for UMC is 9.02 USD with a low forecast of 8.21 USD and a high forecast of 9.55 USD.
Shareholder Yield
Current shareholder yield for United Microelectronics Corp is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Price
United Microelectronics Corp
Average Annual Return | 56.11% |
Standard Deviation of Annual Returns | 93.95% |
Max Drawdown | -46% |
Market Capitalization | 676.5B TWD |
Shares Outstanding | 12 690 799 300 |
Percentage of Shares Shorted |
N/A
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Profile
Country
Industry
Market Cap
Dividend Yield
Description
United Microelectronics Corp. engages in the semiconductor foundry business. The company is headquartered in Hsinchu, Hsinchu. The firm provides integrated circuit (IC) production for applications spanning every sector of the electronics industry. The firm operates through two segments. The Wafer Fabrication segment is mainly engaged in the manufacture of chips to the design specifications of its customers by using its own processes and techniques. The New Business segment is engaged in the research, development, manufacture and provision of solar energy. The firm is engaged in the maintenance of a customer base across various industries, including communication, consumer electronics, computer, memory, new generation light-emitting diode (LED) and others, while focusing on manufacturing for applications, including networking, telecommunications, Internet, multimedia, personal computers (PCs) and graphics.
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The intrinsic value of one UMC stock under the Base Case scenario is 9.62 USD.
Compared to the current market price of 8.45 USD, United Microelectronics Corp is Undervalued by 12%.