United Microelectronics Corporation UMC reported better-than-expected second-quarter 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The company reported earnings of 54 cents per ADS, up from 12 cents reported in the year-ago quarter. The figure beat the Zacks Consensus Estimate by 237.5%.
Revenues rose 8.4% year over year to $2.18 billion and surpassed the consensus mark by 5.4%. Higher wafer shipments, improved utilization and record 22/28-nanometer sales supported the quarter, while utilization reached 85%.
UMC's Revenue Mix Strengthens
Wafer shipments rose 10.6% from the prior quarter to 1.129 million 12-inch-equivalent wafers, reflecting stronger demand from the communication and consumer markets.
The communication segment contributed 39% of wafer revenues, consumer accounted for 32%, computer represented 13% and other applications made up 16%. Asia remained the largest market at 66% of wafer sales, followed by North America at 22%, Europe at 8% and Japan at 4%.
United Microelectronics Corporation Price, Consensus and EPS Surprise
United Microelectronics Corporation price-consensus-eps-surprise-chart | United Microelectronics Corporation Quote
United Microelectronics Gains From Advanced Nodes
In the second quarter of 2026, revenues from 22/28-nanometer technologies increased to 37% of wafer sales, up from 34% in the first quarter of 2026. The 22-nanometer business represented 17.5% of second-quarter sales and reached a record level.
Technologies at 40 nanometers and below generated 52% of wafer revenues. The 40-nanometer node contributed 15%, while 65 nanometers accounted for 18%. Fabless customers represented 85% of wafer sales, with integrated device manufacturers contributing the remaining 15%.
United Microelectronics' Margins Expand
UMC’s gross margin was 25.3%, which expanded 380 basis points (bps) from the year-ago quarter and 330 bps sequentially, as improved factory loading and a low-single-digit increase in blended average selling prices supported profitability.
UMC’s operating margin of 21.8% expanded 340 bps year over year and 330 bps sequentially.
UMC's Cash Position Strengthens
As of June 30, 2026, cash and cash equivalent balances were $3.92 billion, up from $3.41 billion as of March 31, 2026.
Cash flow from operating activities was NT$33.70 billion in the second quarter. Capital expenditures totaled NT$9.73 billion, leading to free cash flow of NT$23.97 billion.
United Microelectronics Advances AI Capabilities
UMC completed its first mass-production delivery of 12-inch photonic integrated circuits during the quarter. The milestone demonstrated its high-volume silicon photonics manufacturing capabilities ahead of the planned general availability of its platform in 2027.
Management said AI-related products span power management, connectivity, field-programmable gate arrays, advanced packaging and silicon photonics. The company expects AI-related revenues to approach $300 million in 2026 and exceed $1 billion within three years.
UMC Issues an Upbeat Q3 View
For the third quarter of 2026, management expects wafer shipments to increase by a high-single-digit percentage sequentially. U.S. dollar average selling prices are projected to remain firm, gross margin is expected in the mid-30% range, and capacity utilization should exceed 90%.
The Zacks Consensus Estimate for third-quarter 2026 revenues and earnings is currently pegged at $2.21 billion and 18 cents per share, respectively.
UMC raised its 2026 capital expenditure budget to $2 billion from $1.5 billion. The company plans phased investments in Singapore cleanroom capacity and a new fab in Tainan to support silicon photonics and advanced packaging opportunities. Third-quarter capacity is projected to increase to 1.325 million 12-inch-equivalent wafers.
UMC’s Zacks Rank and Other Stocks to Consider
Currently, United Microelectronics sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector are AppFolio APPF, Amkor Technology AMKR and Amphenol APH, each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of AppFolio have declined 19.6% year to date. The Zacks Consensus Estimate for APPF’s 2026 earnings is pegged at $6.90 per share, up by 2.2% over the past seven days, indicating an increase of 30.4% year over year.
Shares of Amkor Technology have jumped 8.2% year to date. The Zacks Consensus Estimate for AMKR’s 2026 earnings is pegged at $2.08 per share, unchanged over the past 30 days, indicating a rise of 38.7% year over year.
Amphenol shares have surged 11.3% year to date. The Zacks Consensus Estimate for APH’s 2026 earnings is pegged at $4.87 per share, up by 7 cents over the past 30 days, indicating an increase of 45.8% year over year.
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This article originally published on Zacks Investment Research (zacks.com).