UMC's 2014 Earnings Beat Market Expectation

United Microelectronics Corp. (UMC), reportedly the second-biggest silicon foundry globally, announced net income generated by parent company of NT$4.56 billion (US$147.19 million), or NT$0.36 per ordinary share, in Q4, 2014, surging 56.5% from the previous quarter to beat the NT$0.25-0.3 per share expected by the market.

The net income helped float the attributable net income for 2014 to NT$12.14 billion (US$391.64 million), or NT$0.97 per share, also topping market expectations.

Also the company projects its revenue for Q1, 2015 to rise 3-5% quarter on quarter to hit new high, in contrast to a 5% decrease projected by the market, due to sustained growth in the company's wafer shipments and average selling price.

In Q4, 2014 the company had consolidated revenue of NT$37.23 billion (US$1.20 billion), rising 5.7% from a quarter earlier to hit new high. Its gross margin rate gained 5.9 of a percentage point to 27.4%, exceeding 25% projected by the market, with operating income of NT$4.53 billion (US$146.19 million), spiking 168.6% from the third quarter.

Throughout last year, the company posted  revenue of NT$140.01 billion (US$4.51 billion), growing 13.1% to hit new high. Its average gross margin rate rose to 22.8% and operating income shot up 149.9% from that in 2013 to NT$10.07 billion (US$325.03 million).

UMC Chief Executive Officer (CEO) P.W. Yen said the company's revenue of NT$34.74 billion (US$1.12 billion) from foundry service in Q4, 2014 included a lump-sum royalty fee of around five billion yen (US$42.73 million) paid by Fujitsu Semiconductor Ltd. for using the company's 40 nanometer process, hence pushing up the company's gross margin rate for foundry service and operating income rate to 30.2% and 14.6%, respectively.

Its capacity utilization rate ran at 93% in Q4, 2014, with 7% of its production on 28-nanometer process and output using high-K metal gate (HKMG) process to outnumber output using poly-SiON process.

Yen says, excluding the Fujitsu royalty fee, the company's operating income from foundry service soared at annual rate of 74% throughout 2014 mostly due to significant growth in wafer shipment and 28nm process capacity.

This year, the company plans to invest US$1.8 billion to boost 28nm process capacity and develop 14nm FinFET process.

(KL)

UMC's Quarterly Results for 2014 and Forecast for Q1 ‘15

	Q2, 2014	Q3, 2014	Q4, 2014	Q1, 2015
Revenue	NT$35.86bn	NT$35.21bn	NT$37.23bn	Wafer shipment to increase 2-3%, average selling price to increase 3%, foundry service gross margin rate at 25%, capacity utilization at 90%, new business operation to lose NT$170M
Gross margin rate (%)	22.90	21.50	27.40
After-tax net income	NT$3.48bn	NT$2.91bn	NT$4.56bn
EPS	NT$0.28	NT$0.23	NT$0.36

Source: UMC