U.S.-based microchip manufacturer UMC experiences a 35% decline in second-quarter net profit, attributed to the strengthening of the New Taiwan dollar
United Microelectronics Corp (UMC), the world's fourth-largest foundry service provider, has released its financial results for the second quarter of 2025. The company's net profit for the June quarter stood at NT$8.9 billion, a significant drop of 35% compared to the same period last year.
UMC's gross margin for the quarter saw a decline, falling from 35.18% a year ago to 28.73%. The decrease was primarily attributed to currency volatility, specifically a 3 percentage point negative impact due to fluctuations in the New Taiwanese dollar. Other factors included weaker demand in certain segments such as memory and analog chips, which pressured overall margin levels despite some improvement in cost discipline and pricing power in niche markets.
Jason Wang, UMC's co-president, stated that the company aims to improve the gross margin back to its original level. He also noted that the gross margin this quarter would still be subject to changes in foreign exchange rates. UMC expects the NT dollar to increase to NT$29.8 against the US dollar, up 3.28% from the second-quarter assumption of NT$30.81. Every 1% appreciation of the NT dollar would reduce UMC's gross margin by 0.4 to 0.5 percentage points, as estimated by the company.
Despite the challenging quarter, UMC has made significant strides in its technological advancements. The first process design kit for the 12-nanometer chip production is expected to be ready for customers in June next year. UMC's collaboration with Intel Corp to develop 12-nanometer foundry services remains on track. The 12-nanometer chip production is expected to begin in 2027.
UMC's strategic emphasis on the 22/28nm node—accounting for 40% of wafer revenue and showing strong utilization—helps buffer margins, but was not sufficient to fully offset these headwinds in the reported period. The factory utilization rate for UMC this quarter is expected to stay at about 75%, similar to last quarter's level.
Looking ahead, wafer shipments are projected to increase slightly by 2-3% quarter-on-quarter, due to cooling demand ahead of the implementation of US tariffs. UMC expects depreciation costs for its manufacturing equipment and facilities to peak, with such costs only increasing by a single-digit percent annually next year.
Despite the challenges faced in Q2 2025, UMC remains optimistic about its future prospects. Average selling prices are projected to hold steady this quarter for UMC, and the company is confident that it will continue to make strides in its technological advancements, positioning itself for a strong recovery in the coming quarters.
[1] "UMC Q2 2025 Results: Currency Volatility and Demand Weakness Impact Gross Margin", TechNews, 2025. [2] "UMC's Emphasis on 22/28nm Node Helps Buffer Margins", Electronics Weekly, 2025. [3] "UMC's 12nm Process Design Kit on Track for June 2026 Release", Semiconductor Engineering, 2025.
- The decline in UMC's gross margin can be partly attributed to the impact of currency volatility, particularly the depreciation of the New Taiwanese dollar, and weaker demand in certain technology segments such as memory and analog chips.
- Despite the challenging second quarter of 2025, UMC is optimistic about its future prospects, citing its focus on technological advancements, specifically the development of the 12-nanometer chip production, as key factors for a strong recovery in the coming quarters.
