United Microelectronics Corp (NYSE: UMC)

Sector: Technology Industry: Semiconductors CIK: 0001033767
Market Cap 21.45 Bn
P/B 1.81
P/E 15.67
P/S 2.77
ROIC (Qtr) 321.69
Div Yield % 0.00
Rev 1y % (Qtr) 1.31
Total Debt (Qtr) 2.49 Bn
Debt/Equity (Qtr) 0.21

About

United Microelectronics Corporation (UMC), a prominent player in the semiconductor industry, is a Taiwan-based company whose stock is listed on the Taiwan Stock Exchange and the New York Stock Exchange under the ticker symbol UMC. UMC is renowned for its independent semiconductor foundry, offering manufacturing services to clients worldwide. UMC's primary business activities encompass the design, manufacture, and sale of a diverse range of semiconductor products, which include logic, mixed-signal, and memory devices. The company's product portfolio...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 3.28B provides robust 1.32x coverage of total debt 2.49B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 3.42B provide 6.24x coverage of short-term debt 548.05M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 3.28B provides strong 167.78x coverage of stock compensation 19.52M, indicating sustainable incentive practices.
  • Strong tangible asset base of 18.08B provides 7.26x coverage of total debt 2.49B, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 3.28B provides 10.86x coverage of SG&A expenses 301.57M, showing efficient operational cost management.

Bear case

  • Operating cash flow of 3.28B barely covers its investment activities of (1.74B), with a coverage ratio of -1.88, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (1.74B) provide weak support for R&D spending of 561.75M, which is -3.10x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Free cash flow of 1.60B represents just -8.95x of debt issuance (178.74M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 3.28B barely covers operating expenses of (55.89M) with a -58.61 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Operating earnings of 1.50B show weak coverage of depreciation charges of 1.87B, with a 0.80 ratio indicating high capital intensity and potential reinvestment needs.

Geographical areas [axis] Breakdown of Revenue (2023)

Products and services [axis] Breakdown of Revenue (2023)

Peer comparison

Companies in the Semiconductors
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NVDA Nvidia Corp 4,516.69 Bn 45.53 24.14 10.48 Bn
2 TSM Taiwan Semiconductor Manufacturing Co Ltd 1,678.13 Bn 32.54 14.09 31.18 Bn
3 AVGO Broadcom Inc. 1,624.80 Bn 70.26 25.43 65.14 Bn
4 MU Micron Technology Inc 386.61 Bn 32.46 9.14 12.43 Bn
5 AMD Advanced Micro Devices Inc 330.88 Bn 100.08 10.33 3.87 Bn
6 INTC Intel Corp 300.63 Bn 1,518.33 5.63 46.55 Bn
7 QCOM Qualcomm Inc/De 195.07 Bn 35.20 4.40 14.81 Bn
8 TXN Texas Instruments Inc 173.86 Bn 34.48 10.07 14.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.16 4.22
EV to Cash from Ops. EV/CFO 0.91 -369.72
EV to Debt EV to Debt 1.19 90.98
EV to EBIT EV/EBIT 1.99 -66.75
EV to EBITDA EV/EBITDA 0.90 23.41
EV to Free Cash Flow [EV/FCF] EV/FCF 1.86 -8.88
EV to Market Cap EV to Market Cap 0.14 0.80
EV to Revenue EV/Rev 0.38 20.68
Price to Book Value [P/B] P/B 1.81 5.21
Price to Earnings [P/E] P/E 15.67 11.55
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 2.39
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 8.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.63
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 9.91
Interest Coverage Int. cover (Qtr) 0.00 8.38
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 41.39 -155.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 4.45 45.60
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.64
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -14.55 26.23
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 7.11 47.12
EBIT Growth (1y) % EBIT 1y % (Qtr) -18.38 25.83
EBT Growth (1y) % EBT 1y % (Qtr) -18.38 39.93
EPS Growth (1y) % EPS 1y % (Qtr) -14.79 24.64
FCF Growth (1y) % FCF 1y % (Qtr) 1,663.24 244.42
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -5.78 43.10
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.01 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.09
Cash Ratio Cash Ratio (Qtr) 1.27 2.23
Current Ratio Curr Ratio (Qtr) 2.34 5.43
Debt to Equity Ratio Debt/Equity (Qtr) 0.21 0.34
Interest Cover Ratio Int Coverage (Qtr) 0.00 8.38
Times Interest Earned Times Interest Earned (Qtr) 0.00 8.38
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 43.50 -112.38
EBIT Margin % EBIT Margin % (Qtr) 589.21 -91.98
EBT Margin % EBT Margin % (Qtr) 19.33 -132.25
Gross Margin % Gross Margin % (Qtr) 28.90 47.73
Net Profit Margin % Net Margin % (Qtr) 17.70 -133.26