Taiwan-headquartered semiconductor foundry giant, United Microelectronics Corp (NYSE: UMC), unveiled its results for the fiscal fourth quarter on Wednesday, delivering a mixed performance that surprised some investors. The company reported consolidated revenue of $1.97 billion (61.81 billion New Taiwanese dollars), reflecting a decline of 2.4% compared with the same period a year ago. Despite the modest contraction in sales, this figure notably exceeded the consensus analyst estimate of $1.88 billion.
On a sequential basis, revenue exhibited a modest improvement, rising 4.5% from the prior quarter, indicating a slight recovery or stabilization in demand towards the end of the fiscal year.
In terms of profitability, United Microelectronics posted earnings per American Depositary Share (ADS) of 13 cents, once again surpassing analysts’ expectations which averaged 12 cents. This earnings outcome suggests operational efficiencies and cost controls that helped the company to outpace earnings forecasts despite revenue headwinds.
Strengthening Advanced Process Nodes Drive Revenue Mix
The firm emphasized continued strengthenings in its advanced semiconductor manufacturing technologies, which remain critical for competitiveness amid rising demand for cutting-edge chips. The 22 nanometer (nm) and 28nm process nodes together accounted for 36% of wafer revenue during the quarter, up from 34% a year ago and slightly higher than the 35% contribution recorded the previous quarter. This progression highlights UMC's improving capability to capture higher-value production segments.
Revenue attributed to the 40nm technology node rose to 17% from 16% in the prior year period, albeit down from 18% in the immediate third quarter. This evolutionary revenue shift reflects ongoing adjustments in the company’s technology portfolio as customer demand evolves.
Operational Utilization and Margins Remain Focal Points
Capacity utilization stood at 78% for the quarter, marking a notable increase from the 70% rate reported in the corresponding quarter a year prior, and maintaining a steady level compared with the previous quarter. This suggests a more efficient use of manufacturing assets and potentially improved production planning.
The gross margin expanded marginally to 30.7%, up from 30.4% a year earlier, indicating a slight enhancement in cost management or product mix.
Capital expenditures during the quarter totaled $501 million, reflecting continued investment in production capacity and technological capabilities.
Outlook and Strategic Initiatives for 2026
Looking forward to the first quarter of 2026, UMC’s co-president, Jason Wang, shared tempered yet optimistic guidance. He indicated that wafer demand is expected to remain firm, underpinned by accelerating tape-outs on the firm's 22nm platforms. UMC envisions 2026 as a growth year supported by this ramp-up alongside broader customer adoption of new solution sets.
Wang underscored the company’s efforts to prepare for future expansion phases by investing strategically in both capacity and cutting-edge technologies. He pointed to the completion of Phase 3 of the Singapore Fab 12i facility in 2025, which already plays a pivotal role in enabling customers to diversify their supply chains.
UMC is simultaneously advancing its footprint in the U.S. through partnerships. These include a collaboration on 12nm technology with Intel Corp (NASDAQ: INTC) and a recently signed memorandum of understanding with Polar Semiconductor. Such alliances are designed to enhance access to critical markets and technological know-how.
The company also highlighted its sustained leadership in specialty domains such as embedded high voltage, non-volatile memory, and bipolar-CMOS-DMOS (BCD) technologies, which have historically provided consistent revenue contributions and are expected to continue supporting growth.
Additionally, emerging areas like advanced packaging and silicon photonics are expected to become meaningful growth drivers starting in 2026 and further into the future. These technologies will position UMC to capture expanding demand across sectors including artificial intelligence (AI), networking, consumer electronics, and automotive applications.
2026 First Quarter Financial and Operational Expectations
For the forthcoming fiscal first quarter ending 2026, the company forecasts wafer shipments and average selling prices denominated in U.S. dollars to remain approximately flat relative to fourth-quarter 2025 levels.
UMC anticipates that its quarterly gross profit margin will hold steady in the high-20% range despite pricing stability, implying continued operational efficiency or favorable product mix effects.
Capacity utilization is expected to sustain in the mid-70% vicinity, indicating maintenance of current production throughput rates.
Capital expenditure plans for the full calendar year 2026 amount to $1.5 billion, demonstrating ongoing commitment to bolstering manufacturing infrastructure and technology advancement.
Market Reaction to Earnings Release
Following the announcement, United Microelectronics’ shares declined on Wednesday, trading down 8.93% to $11.36 as of publication time according to Benzinga Pro data. This negative market response reflects investor caution regarding the flat pricing outlook and capacity utilization forecasts despite the earnings beat and revenue exceeding expectations.
UMC's latest financials illustrate a company navigating a complex landscape where advanced node growth and stable capacity utilization yield modest margin improvements amid pressures from flat pricing and conservative shipment projections. The strategic emphasis on specialty technologies and partnerships indicates a deliberate approach to sustaining competitiveness and preparing for emerging opportunities in semiconductor applications spanning AI, automotive, and communications sectors.