UMC Reports Fourth Quarter 2021 Results

·11 min read

2021 EPS grew 89% YoY to NT$4.57; ROE 21.6%

Company well-positioned to capture industry growth driven by mega-trends

Fourth Quarter 2021 Overview1:

  • Revenue: NT$59.10 billion (US$2.14 billion)

  • Gross margin: 39.1%; Operating margin: 29.8%

  • Revenue from 22/28nm: 20%

  • Capacity utilization rate: 100%+

  • Net income attributable to shareholders of the parent: NT$15.95 billion (US$576 million)

  • Earnings per share: NT$1.30; earnings per ADS: US$0.235

TAIPEI, Taiwan, January 25, 2022--(BUSINESS WIRE)--United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) ("UMC" or "The Company"), a leading global semiconductor foundry, today announced its consolidated operating results for the fourth quarter of 2021.

Fourth quarter consolidated revenue was NT$59.10 billion, increasing 5.7% QoQ from NT$55.91 billion in 3Q21. Compared to a year ago, 4Q21 revenue grew 30.5% YoY from NT$45.30 billion in 4Q20. Consolidated gross margin for 4Q21 was 39.1%. Net income attributable to the shareholders of the parent was NT$15.95 billion, with earnings per ordinary share of NT$1.30.

Jason Wang, UMC co-president, said, "In the fourth quarter, strong demand continued to drive full loading across our fabs, while overall wafer shipments grew 1.7% QoQ to 2.55 million 8-inch equivalents. For the full year, revenue in 2021 rose by more than 20% YoY and operating income reached a record high, driven by a surge in our 28nm business. The 75% YoY revenue increase from 28nm technologies strengthened our overall wafer ASP and reflected the robust chip demand related to 5G, AIoT, and automotive mega-trends. It also substantially contributed to the improvement in the company’s financial structure. Our healthy 28nm product pipeline will further diversify our portfolio and customer base, and enable UMC to capture additional market share."

Co-president Wang said, "Looking ahead into Q1 2022, we anticipate that demand across all nodes in UMC’s addressable markets will continue to outpace supply. Our growth in the long term is supported by industry megatrends, which will be catapulted by structural changes occurring in the industry. We will continue to deepen collaboration with customers with our differentiated specialty technologies, manufacturing excellence, and capacity expansions closely linked to the demands of our partners. At the same time, we will keep pushing for cost reduction and meticulously manage our CapEx in order to deliver sustainable and healthy returns for our shareholders."

Co-president Wang added, "We were thrilled to receive a number of recognitions recently for our relentless focus on sustainability. Following our net-zero pledge in June, UMC was ranked no.1 among all semiconductor constituents listed on the Dow Jones Sustainability Indices (DJSI), which has included the company on its World Index for 14 straight years. We were also awarded Taiwan Intellectual Property Management System (TIPS) certification, Taiwan’s official IP management benchmark for enterprises, underscoring our commitment to strengthen overall corporate governance. Sustainability is at the core of everything we do, and we will continue prioritizing resources to drive critical initiatives in our ESG roadmap."

Summary of Operating Results

Operating Results

(Amount: NT$ million)

4Q21

3Q21

QoQ %
change

4Q20

YoY %
change

Operating Revenues

59,100

55,907

5.7

45,296

30.5

Gross Profit

23,103

20,544

12.5

10,848

113.0

Operating Expenses

(6,821

)

(6,636

)

2.8

(6,335

)

7.7

Net Other Operating Income and Expenses

1,334

1,227

8.7

1,102

21.1

Operating Income

17,616

15,135

16.4

5,615

213.7

Net Non-Operating Income and Expenses

558

4,317

(87.1

)

5,619

(90.1

)

Net Income Attributable to Shareholders of the Parent

15,949

17,460

(8.7

)

11,196

42.5

EPS (NT$ per share)

1.30

1.43

0.92

(US$ per ADS)

0.235

0.258

0.166

Fourth quarter operating revenues increased by 5.7% sequentially to NT$59.10 billion which was partly attributed to enhanced product mix and higher wafer shipments. Revenue contribution from 40nm and below technologies represented 38% of wafer revenue. Gross profit grew 12.5% QoQ to NT$23.10 billion, or 39.1% of revenue. Operating expenses was up 2.8% to NT$6.82 billion. Net other operating income reached NT$1.33 billion. Net non-operating income was NT$558 million. Net income attributable to shareholders of the parent amounted to NT$15.95 billion.

Earnings per ordinary share for the quarter was NT$1.30. Earnings per ADS was US$0.235. The basic weighted average number of outstanding shares in 4Q21 was 12,254,114,875, compared with 12,206,292,756 shares in 3Q21 and 12,206,292,756 shares in 4Q20. The diluted weighted average number of outstanding shares was 12,489,949,678 in 4Q21, compared with 12,411,100,649 shares in 3Q21 and 12,359,115,536 shares in 4Q20. The fully diluted shares counted on December 31, 2021 were approximately 12,519,315,000.

Detailed Financials Section

COGS & Expenses

(Amount: NT$ million)

4Q21

3Q21

QoQ %
change

4Q20

YoY %
change

Operating Revenues

59,100

55,907

5.7

45,296

30.5

COGS

(35,997

)

(35,363

)

1.8

(34,448

)

4.5

Depreciation

(10,122

)

(9,900

)

2.2

(10,436

)

(3.0

)

Other Mfg. Costs

(25,875

)

(25,463

)

1.6

(24,012

)

7.8

Gross Profit

23,103

20,544

12.5

10,848

113.0

Gross Margin (%)

39.1

%

36.8

%

23.9

%

Operating Expenses

(6,821

)

(6,636

)

2.8

(6,335

)

7.7

G&A

(2,164

)

(2,119

)

2.2

(1,966

)

10.0

Sales & Marketing

(1,240

)

(1,212

)

2.3

(1,175

)

5.5

R&D

(3,414

)

(3,303

)

3.4

(3,194

)

6.9

Expected Credit Impairment Gain (Loss)

(3

)

(2

)

37.8

0

-

Net Other Operating Income & Expenses

1,334

1,227

8.7

1,102

21.1

Operating Income

17,616

15,135

16.4

5,615

213.7

Operating revenues increased to NT$59.10 billion. COGS was up 1.8 % QoQ to NT$36.00 billion, which included 2.2% sequential increase in depreciation. Gross profit grew 12.5% QoQ to NT$23.10 billion, partly due to enhanced product mix. Operating expenses increased 2.8% QoQ to NT$6.82 billion, as R&D increased 3.4% QoQ to NT$3.41 billion, representing 5.8% of revenue. Net other operating income was NT$1.33 billion. In 4Q21, operating income grew 16.4% QoQ to NT$17.62 billion.

Non-Operating Income and Expenses

(Amount: NT$ million)

4Q21

3Q21

4Q20

Non-Operating Income and Expenses

558

4,317

5,619

Net Interest Income and Expenses

(343

)

(367

)

(278

)

Net Investment Gain and Loss

2,689

4,534

5,703

Exchange Gain and Loss

312

164

199

Other Gain and Loss

(2,100

)

(14

)

(5

)

Net non-operating income in 4Q21 was NT$558 million, primarily reflecting NT$2.69 billion in net investment gain, offset by a NT$2.10 billion in other loss which included the one-time legal settlement payment and the losses of financial instrument transaction.

Cash Flow Summary

(Amount: NT$ million)

For the 3-Month
Period Ended

Dec. 31, 2021

For the 3-Month
Period Ended

Sep. 30, 2021

Cash Flow from Operating Activities

26,822

22,125

Net income before tax

18,174

19,452

Depreciation & Amortization

11,817

11,754

Share of profit of associates and joint ventures

(2,491

)

(3,356

)

Income tax paid

(222

)

(1,365

)

Changes in working capital & others

(456

)

(4,360

)

Cash Flow from Investing Activities

(13,339

)

(23,222

)

Acquisition of PP&E

(14,707

)

(17,457

)

Acquisition of intangible assets

(100

)

(371

)

Decrease (Increase) in other financial assets

1,589

(5,677

)

Others

(121

)

283

Cash Flow from Financing Activities

6,367

(9,694

)

Bank loans

(1,359

)

(4,510

)

Bonds Issued

5,000

11,161

Increase in deposits-in

2,896

3,738

Cash dividends

(1

)

(19,870

)

Others

(169

)

(213

)

Effect of Exchange Rate

(333

)

(104

)

Net Cash Flow

19,517

(10,895

)

Beginning balance

113,105

124,000

Ending balance

132,622

113,105

In 4Q21, cash inflow from operating activities was NT$26.82 billion. Cash outflow from investing activities amounted to NT$13.34 billion, which included NT$14.95 billion in capital expenditure, resulting in free cash flow of NT$11.87 billion. Cash inflow from financing reached NT$6.37 billion, primarily from a NT$5.00 billion in bond issuance and a NT$2.90 billion payment as capacity deposit for 12A P6 offset by a NT$1.36 billion in repayment in bank loans. Net cash inflow in 4Q21 totaled NT$19.52 billion. Over the next 12 months, the company expects to repay NT$8.70 billion in bank loans.

Current Assets

(Amount: NT$ billion)

4Q21

3Q21

4Q20

Cash and Cash Equivalents

132.62

113.11

94.05

Notes & Accounts Receivable

35.19

32.99

27.27

Days Sales Outstanding

53

51

55

Inventories, net

23.01

23.15

22.55

Days of Inventory

59

59

60

Total Current Assets

233.27

211.60

164.31

Cash and cash equivalents increased to NT$132.62 billion. Days of inventory remained at 59 days.

Liabilities

(Amount: NT$ billion)

4Q21

3Q21

4Q20

Total Current Liabilities

105.45

84.55

78.24

Notes & Accounts Payable

8.36

8.26

7.86

Short-Term Credit / Bonds

39.26

24.26

38.04

Payables on Equipment

7.88

6.72

5.45

Other

49.95

45.31

26.89

Long-Term Credit / Bonds

39.83

51.09

24.77

Long-Term Investment Liabilities

8.25

8.14

20.75

Total Liabilities

183.22

171.19

141.74

Debt to Equity

65

%

66

%

60

%

Current liabilities increased to NT$105.45 billion, which included a NT$39.26 billion in short-term credit/bonds. Long-term credit/bonds decreased to NT$39.83 billion. Total liabilities increased to NT$183.22 billion, leading to a debt to equity ratio of 65%.

Analysis of Revenue2

Revenue Breakdown by Region

Region

4Q21

3Q21

2Q21

1Q21

4Q20

North America

21%

22%

22%

23%

29%

Asia Pacific

66%

65%

63%

63%

61%

Europe

7%

7%

8%

8%

5%

Japan

6%

6%

7%

6%

5%

Revenue from Asia-Pacific increased to 66% while business from North America accounted for 21% of sales. Business from Europe was 7% while contribution from Japan remained at 6%.

Revenue Breakdown by Geometry

Geometry

4Q21

3Q21

2Q21

1Q21

4Q20

14nm and below

0%

0%

0%

0%

0%

14nm<x<=28nm

20%

19%

20%

20%

18%

28nm<x<=40nm

18%

18%

18%

20%

22%

40nm<x<=65nm

19%

19%

19%

18%

18%

65nm<x<=90nm

8%

8%

9%

8%

8%

90nm<x<=0.13um

12%

12%

11%

11%

11%

0.13um<x<=0.18um

13%

13%

13%

13%

13%

0.18um<x<=0.35um

7%

8%

8%

8%

8%

0.5um and above

3%

3%

2%

2%

2%

Revenue contribution from 22/28nm amounted to 20% of the wafer revenue, while 40nm contribution stayed at 18% of sales.

Revenue Breakdown by Customer Type

Customer Type

4Q21

3Q21

2Q21

1Q21

4Q20

Fabless

86%

86%

84%

86%

87%

IDM

14%

14%

16%

14%

13%

Revenue from fabless customers accounted for 86% of revenue.

Revenue Breakdown by Application (1)

Application

4Q21

3Q21

2Q21

1Q21

4Q20

Computer

17%

17%

17%

16%

16%

Communication

46%

46%

47%

46%

49%

Consumer

26%

27%

26%

27%

25%

Others

11%

10%

10%

11%

10%

Revenue from the communication segment remained unchanged at 46%, while business from computer applications also stayed at 17%. Business from consumer applications declined to 26% as other segments accounted represented 11% of revenue.

(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, WLAN. Communication consists of handset components, broadband, 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 ASP Trend

Blended average selling price (ASP) grew in 4Q21.

(To view blended ASP trend, please click here for 4Q21 ASP)

Shipment and Utilization Rate3

Wafer Shipments

4Q21

3Q21

2Q21

1Q21

4Q20

Wafer Shipments
(8" K equivalents)

2,546

2,503

2,440

2,372

2,293

Quarterly Capacity Utilization Rate

4Q21

3Q21

2Q21

1Q21

4Q20

Utilization Rate

100%+

100%+

100%+

100%

99%

Total Capacity
(8" K equivalents)

2,419

2,383

2,370

2,280

2,311

Wafer shipments increased 1.7% QoQ to 2,546K in the fourth quarter, while quarterly capacity grew to 2,419K. Overall utilization rate in 4Q21 surpassed 100%.

Capacity4

Overall capacity in the fourth quarter grew by 1.5% QoQ to 2,419K 8-inch equivalent wafers. Capacity will remain flattish for the first quarter of 2022 at 2,420K 8-inch equivalent wafers.

Annual Capacity in

thousands of wafers

Quarterly Capacity in

thousands of wafers

FAB

Geometry
(um)

2021

2020

2019

2018

FAB

1Q22E

4Q21

3Q21

2Q21

WTK

6"

5 – 0.25

329

371

370

396

WTK

82

81

80

84

8A

8"

3 – 0.18

755

802

825

825

8A

189

190

190

190

8C

8"

0.35 – 0.11

459

452

436

383

8C

113

115

115

115

8D

8"

0.18 – 0.09

380

371

359

347

101

95

95

95

8E

8"

0.6 – 0.15

457

449

426

418

8E

116

115

115

115

...