UMC Filings — United Microelectronics Corporation - FilingSpy
UMC
United Microelectronics Corporation
A maker of the chips that power everyday electronics, Taiwan's United Microelectronics (UMC) runs foundries that manufacture semiconductors for other companies, supplying everything from phones and TVs to cars and networking gear. It began in 1980 as Taiwan's first semiconductor company, spun off from the government-backed Industrial Technology Research Institute and initially making circuits for electronic watches using RCA technology. Fun twist: the "united" in its name reflected its early days as an all-in-one company that handled design, fabrication, and packaging under one roof before it shifted to a pure-play foundry model in 1995.
20-F · Fiscal year ended Dec 31, 2025 · SEC filing ↗
UMC's gross margin fell to 29.0% as a 5.4% drop in average selling price and currency headwinds outweighed a 12.3% increase in wafer shipments.
Pricing power eroded further, even as volumes recovered. in New Taiwan dollars rose 2.3% to NT$237.6 billion, but contracted 3.6 percentage points to 29.0% as a 5.4% decline in average selling price and a stronger local currency offset a 12.3% increase in wafer shipments. The company is shipping more wafers than last year but earning less on each one, while a new U.S. manufacturing venture and rising trade barriers add cost and complexity.
Key takeaways
fell to 29.0% from 32.6% a year earlier, as a 5.4% decline in average selling price (ASP) and a 2.9% appreciation of the New Taiwan dollar against the U.S. dollar more than offset the benefit of a 12.3% increase in 12-inch equivalent wafer shipments to 3,870 thousand units.
fell 14.8% to NT$43,949 million, with contracting to 18.5%, as R&D expenses rose 13.5% to NT$17,725 million, driven by higher equipment and research costs.
Section summaries
Quantitative and Qualitative Disclosures About Market Risk
Primary market risks are interest rate changes on debt and USD/NT dollar exchange rate moves on receivables and equipment purchases.
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Interest rate risk is the major exposure, concentrated in obligations used for and .
Foreign currency risk arises mainly from USD-denominated and capital equipment purchases from Europe, Japan, and the U.S.
The company uses a controlled risk-management program with variable-rate debt, swaps, and foreign exchange spot transactions; it does not trade derivatives speculatively.
Capacity utilization improved to 75.2% from 68.7% in 2024, and from 28-nanometer and below technologies grew to 36.8% of foundry revenue, reflecting continued migration to more advanced nodes.
dropped to NT$50,562 million from NT$91,100 million in 2024, and the company issued NT$20,000 million in new domestic bonds to fund environmental expenditures and debt repayment.
Customer concentration increased, with the top ten customers accounting for 57.0% of operating revenues, up from 55.6% in 2024, and the largest wafer fabrication customer at 11.8%.
A 6.4 magnitude earthquake in southern Taiwan in January 2025 damaged work-in-progress wafers at Fab 12A, and new U.S. tariffs of 20% on Taiwan goods were set in August 2025, with potential additional tariffs on semiconductors under investigation.
What changed
The ASP decline accelerated: after a 5.0% drop in 2024, ASP fell a further 5.4% in 2025, confirming that pricing pressure is not stabilizing and volume growth alone is insufficient to protect .
The Singapore Fab12i P3 expansion, flagged for a January 2026 production ramp, remains on track, but the sharp reduction in overall to NT$50.6 billion from NT$91.1 billion suggests the heaviest phase of that investment is now behind the company.
The 12nm FinFET collaboration with Intel, announced in January 2024 and flagged as a risk, is now described as targeting U.S.-based production starting in 2027, with the filing explicitly citing U.S. operational inexperience, cost overruns, and potential delays as material risks.
U.S. trade policy risk materialized: the 20% tariff on Taiwan goods set in August 2025 and new January 2025 export controls imposing due diligence requirements on foundries are now active, not hypothetical, and the company identifies them as threats to demand and compliance costs.
What to watch
ASP trajectory in the next quarter to determine whether the 5.4% pricing decline is stabilizing or continuing to erode, and whether the 12.3% shipment increase can be sustained without further price concessions.
Progress and budget adherence for the Intel 12nm collaboration, including any milestone updates or cost revisions ahead of the 2027 production target, given the explicit risk disclosure around U.S. operational inexperience.
Capacity utilization rate as the Singapore Fab12i P3 begins production ramp in 2026; a sustained rate near 75% with rising from the new fab would put further pressure on .
Developments in U.S. trade policy, including the outcome of the semiconductor tariff investigation and any expansion of export controls that could further restrict the customer base or increase compliance costs.
is the primary foreign-exchange strategy, matching revenues and costs in the same currency or offsetting gains and losses across currencies.
As of December 31, 2025, the company held US$22 million in foreign currency forward contracts to sell U.S. dollars against NT dollars at an average rate of NT$31.447.
Management believes market risk is not material as of the balance-sheet date.
U.S.-China trade tensions, including new tariffs and export controls, and geopolitical instability pose material threats to operations and financial performance.
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U.S. tariffs on Taiwan and China imports escalated in 2025, with a 20% tariff on Taiwan goods set in August 2025 and potential new tariffs on semiconductors under investigation, which could reduce demand and increase costs.
New U.S. export controls in January 2025 imposed due diligence requirements on foundries and companies, increasing compliance costs and potentially restricting the customer base we can serve.
The 12nm collaboration with Intel, announced in January 2024, introduces risks including U.S. operational inexperience, cost overruns, and potential delays, with production not expected until 2027.
Customer concentration remains high, with the top ten customers accounting for 57.0% of 2025 operating revenues and the largest wafer fabrication customer at 11.8%, making vulnerable to order cancellations.
Geopolitical conflicts, including the Strait of Hormuz closure in March 2026 and ongoing Ukraine-Russia war, threaten energy supplies and could disrupt chip production and increase costs.
A 6.4 magnitude earthquake in southern Taiwan in January 2025 damaged work-in-progress wafers at Fab 12A, highlighting operational vulnerability to natural disasters despite insurance and countermeasures.
UMC is a leading independent semiconductor foundry that fabricates chips for fabless design companies and integrated device manufacturers, with 2025 revenue led by communication (41.4%) and consumer (30.6%) applications.
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UMC operates 12 fabs across Taiwan, Singapore, China, and Japan, with a total estimated capacity of 5,163 thousand 12-inch equivalents per month and an average utilization rate of 75.2% in 2025.
The company's process technology portfolio spans 14nm to mature nodes, with a strategic collaboration with Intel to develop and commercialize a 12nm process platform targeting U.S.-based production starting in 2027.
UMC's customer base is diversified, with top ten customers representing 57.0% of operating revenues, and accounting for 80.9% of sales in 2025.
The company is pursuing geographic diversification and supply chain resilience through U.S. collaborations, including a 12nm partnership with Intel and an MOU with Polar Semiconductor for 8-inch production.
UMC is committed to net zero emissions by 2050, with interim goals of 50% renewable energy by 2030, and signed a 30-year power purchase agreement for over 30 billion kilowatt-hours from an offshore wind farm.
Research and development spending reached NT$17,725 million (7.5% of operating revenues) in 2025, focusing on logic, specialty processes, and advanced packaging solutions like 3D -to-wafer hybrid bonding and .
Revenue rose 2.3% to NT$237.6B on higher wafer shipments, but gross margin fell to 29.0% due to a 5.4% ASP decline and NTD appreciation.
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Operating revenues grew 2.3% to NT$237,553 million, driven by a 12.3% increase in 12-inch equivalent wafer shipments to 3,870 thousand units, partially offset by a 5.4% decline in average selling price.
contracted from 32.6% to 29.0% as operating costs rose 7.7%, primarily from higher shipments, increased , and utility costs, while ASP erosion and a 2.9% NTD appreciation pressured .
fell 14.8% to NT$43,949 million, with declining to 18.5%, as R&D expenses increased 13.5% to NT$17,725 million, mainly on higher equipment and research costs.
Net cash from operating activities was NT$99,864 million, and dropped to NT$50,562 million; the company issued NT$20,000 million in new domestic bonds in 2025 to fund environmental expenditures and debt repayment.
Capacity utilization improved to 75.2% from 68.7%, and from 28nm and below technologies increased to 36.8% of foundry revenue, reflecting ongoing technology migration.