United Micro (UMCN) Q3 2026 Earnings Report

The call was strongly positive, with record wafer shipments, higher utilization, substantial year-to-date profit growth, firm fourth-quarter guidance, improving 2027 pricing expectations, and significant momentum in AI-related technologies. The main challenges were capacity constraints, uneven demand in computers and some smartphone segments, and expected gross-margin pressure from higher depreciation and raw material costs. Overall, the positive operational and demand trends significantly outweighed the stated challenges.

For the fourth quarter of 2026, UMC expects wafer shipments to increase by low single digits, ASP in U.S. dollar to remain firm, gross margin to be comparable to the preceding quarter, capacity utilization rate to be in the low 90% range, and the 2026 cash-based CapEx budget to be at $2 billion; specialty technology revenue will continue to grow sequentially, while the board approved an additional capital expenditure budget of approximately $3.2 billion. For 2027, UMC expects a 10% blended ASP increase year over year, with a meaningful positive uplift beginning in the first quarter, while capacity utilization remains at a very healthy level and shipment growth is constrained by available manufacturing capacity; silicon photonics will ramp in 2027 and advanced packaging in 2028. The current expansion roadmap targets monthly capacity approximately 18,000 wafers for silicon photonics, 22,000 for DTC and silicon capacitor, and 20,000 for TFLN modulators, with the next phase starting its ramp in late 2028 and reaching its final scale by 2030. AI-related revenue is close to $300 million in 2026 and is expected to exceed a quarter of revenue in the next three years, while depreciation is expected to show low single digit growth, at least for 2027, if not more for 2028; gross margins for the next two years at least will face pressure from depreciation and rising raw material costs, while UMC expects a healthy EBITDA margin structure.