Revenue & Profitability Boost: Consolidated revenue grew 12.6% quarter-over-quarter to NT$68.73 billion. Net income attributable to the parent company reached NT$42.26 billion, yielding a quarterly EPS of NT$3.39 (bringing H1 2026 EPS to NT$4.68).
Gross Margin Expansion: Gross margin improved by more than 3 percentage points sequentially to 32.5% (gross profit of NT$22.3 billion).
Investment & Non-Operating Gains: Strong stock market performance helped propel non-operating investment and dividend income to NT$30 billion for the quarter, bringing total H1 non-operating income to NT$35.6 billion.
Utilization & Wafer Shipments: Total wafer shipments reached 1.13 million 12-inch wafer equivalents (up 10.6% QoQ), driving overall fab capacity utilization up to 85% from 79% in Q1.
Record 22/28nm Performance: Revenue from the 22nm and 28nm processes reached a record high, representing 37% of total revenue (with 22nm alone contributing 17.5%). Nodes at 40nm and below accounted for 52% of total wafer revenue.
Balance Sheet Strength: Cash and cash equivalents reached NT$124.7 billion, with total equity standing at NT$443.9 billion.
Q3 Outlook: Wafer shipments are projected to grow by high single digits QoQ, ASPs in USD will remain firm, and gross margins are guided to reach the mid-30% range.
Fab Utilization: Overall capacity utilization in Q3 is expected to exceed 90%, backed by a rebound in 8-inch loading into the mid-80% range.
AI Revenue Pipeline: Management expects AI-related exposure (spanning silicon photonics, advanced packaging, power management ICs, and connectivity) to reach nearly US$300 million in 2026 and to surpass US$1 billion within three years.
2026 CAPEX Revision: UMC raised its 2026 capital expenditure budget from US$1.5 billion to US$2.0 billion.
Key Growth Drivers: The extra budget is specifically allocated to accelerate customer deployment in silicon photonics and advanced packaging.
Phased Expansion Infrastructure:
Singapore (P4 Facility): Clean room capacity expansion to support 12-inch silicon photonics manufacturing.
Tainan, Taiwan (Fab 12A, P7 & P8): Construction of new fab shells to establish the foundation for scaling advanced packaging technologies (e.g., wafer-to-wafer stacking, discrete DTC, and customized memory stacking).
Multi-Year Capital Plan: In total, the Board approved nearly US$5 billion for phased expansion over the next 2 to 3 years, allowing management to deploy equipment flexibly based on customer commitments and market validation.
Rather than relying on vague AI enthusiasm, UMC quantified its specialty AI revenue pipeline. The company expects AI-related exposure—driven by silicon photonics, advanced packaging, power management, connectivity, and FPGAs—to reach approximately US$300 million in 2026 and scale to over US$1 billion within three years.
The headline 2026 CAPEX increase to US$2.0 billion is part of a larger US$5 billion multi-year expansion program approved by the Board:
Singapore P4 Facility: Clean room expansion targeted specifically at scaling 12-inch silicon photonics manufacturing.
Tainan Fab 12A (P7 & P8): Shell construction to build the physical foundation for advanced packaging deployment.
UMC explicitly stated it is not pursuing standard CoWoS platform solutions. Instead, it is capturing share in 3D wafer-to-wafer hyperbonding, interposers with discrete deep trench capacitors (DTC), and memory-to-memory stacking. Management highlighted over 35 new advanced packaging products currently in discussion for tape-out in late 2026/early 2027.
While Q3 gross margins are guided to the mid-30% range on >90% fab utilization, CFO Chitung Liu noted that depreciation expenses will grow by low-teen percentages annually for at least the next two years due to the new Singapore clean room and Tainan fab shell builds. Investors and analysts should watch EBITDA margin expansion as the truer metric of operational health during this capital phase.
Management provided a realistic ramp schedule for its 12nm collaboration with Intel:
Late 2026: Process Design Kits (PDKs) ready.
2027: Customer tape-outs and pilot production.
2028: Meaningful revenue contribution.
UMC is also actively expanding 12nm derivatives into high-voltage processes (e.g., 14HV).
The macro recovery remains strictly “AI-led”. Traditional consumer segments (smartphones, PCs, notebooks) continue to show year-over-year weakness, leading to higher customer inventory days. However, UMC is outperforming general end-market weakness by taking foundry and customer market share in 22/28nm nodes and seeing an 8-inch utilization rebound to mid-80%.
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