Oct 28, 2026 earnings call — UMC accelerates capacity expansion and CapEx
Board approved an additional capital expenditure budget of approximately $3.2 billion to accelerate expansion.
Revenue $2.3B (est $2.3B) · EPS $0.21 (est $0.23)
Key quotes
"We are pleased to announce our board of directors today approved an additional capital expenditure budget of approximately $3.2 billion, which will enable us to accelerate our expansion schedule as we continue to align with customers on their product roadmap and requirements."
"Under our current expansion roadmap, we are targeting monthly capacity approximately 18,000 wafers for silicon photonics, 22,000 for DTC and silicon capacitor, and 20,000 for TFLN modulators."
"While we anticipate a 10% blended ASP increase year over year, this is more than an incremental pricing improvement."
Analyst Q&A 5
2027 outlook, pricing, CapEx, AI share
Q (Sunny Lin · UBS): Analyst asked for an early view of 2027 revenue and ASP visibility, progress of 2027 pricing talks, details on the additional CapEx and capacity for silicon photonics and advanced packaging, oversupply risk, and how AI revenue may grow by 2029.
A: Management said growth momentum from 2026 should continue into 2027, driven by healthy core demand and AI-related opportunity, but shipment growth will be constrained by capacity with utilization already above 90%. They expect a 10% blended ASP increase year-over-year for 2027 and described targeted monthly capacities: 18,000 for silicon photonics, 22,000 for DTC and silicon capacitor, and 20,000 for TFLN, with ramps starting late 2028 and reaching scale by 2030. They do not believe they are building ahead of the market, are phasing capacity to mitigate risk, and said AI-related revenue in 2026 was close to $300 million and will probably exceed a quarter of revenue in three years.
"For 2027 early view, we expect the growth momentum established in 2026 will continue into the next year, supported by the healthy demand across our core business and growing opportunity in differentiated technology and high-value applications." — Jason Wang (CEO)
Pricing, capacity timing, gross margin view
Q (Laura Chen · Citi): Analyst asked whether the 10% price increase is blended or like-for-like, for more color on silicon photonics and TFLN capacity plans and locations, and whether there is structural gross margin upside.
A: Management confirmed the 10% is a company-wide blended ASP change and reflects both pricing improvement and a richer product mix. They reiterated the capacity build plan of approximately 18,000 for silicon photonics, 22,000 for DTC (silicon capacitor), and 20,000 for TFLN, with initial installs in late 2028 into 2029 and scale by 2030; locations: silicon photonics in Singapore, silicon capacitor in Tainan, and TFLN in 8-in operations. On margins, they expect price increases likely in Q1 but see headwinds from rising raw material costs and higher depreciation, so EBITDA should be healthy but gross margin is unlikely to reach prior cycle highs.
"At this current stage, we project the initial install will happen in late 2028 and going into 2029 and reach the scale by 2030." — Jason Wang (CEO)
What drives the 10% price rise?
Q (Haas Liu · BofA): Analyst wanted a like-for-like breakdown of the 10% ASP increase, how much is cost pass-through vs tighter supply, risk of customers pushing back if non-AI demand weak, and timelines/economics for new businesses by 2029.
A: Management said the pricing picture is complex across contracts, nodes and applications, so they prefer to present a blended view; mix and inflationary cost increases both contribute to the price change. They said utilization is healthy (improved from 85% to above 90% in H2 2026) and that some sub-100% readings reflect demand-capacity configuration mismatch rather than idle fabs; silicon photonics should ramp in 2027 and advanced packaging in 2028, and they expect these new businesses to be accretive and above corporate-average margins as they scale.
Non-AI demand and AI durability
Q (Charlie Chan · Morgan Stanley): Analyst asked whether non-AI demand cuts are appearing, views on PC and smartphone end markets and inventories, clarity on the blended 10% ASP, and how UMC views the sustainability of AI demand for their products.
A: Management said demand momentum should sustain into 2027 with AI as the key growth driver; they see healthy automotive and premium smartphone exposure but weaker mid/low-end smartphone and some softness in PC-related products. They stressed their AI-related work focuses on technology migration (for example optical speed upgrades like 1.6T to 3.2T) and packaging solutions, so demand is driven by those system upgrades rather than a single AI-processor cycle.
"We're not talking about the AI demand in general" — Jason Wang (CEO)
AI share, silicon photonics ramp, margins
Q (Gokul Hariharan · JPMorgan): Analyst asked to confirm the timing for the 25% AI revenue target, expected revenue from silicon photonics and eDTC next year, market share aspirations for silicon photonics, TFLN customer breadth, how much capacity can be squeezed in 2027, and depreciation/gross margin outlook.
A: Management clarified the 25% AI exposure refers to the next three years and said AI-related revenue was around $300 million in 2026, but most new capacity will come online late 2028 so 2027 remains constrained. They said they have high aspirations for silicon photonics market share, that 12-in PIC performance looks strong and TFLN engagement has broad customer interest beyond HyperLight, and they expect very limited extra capacity for 2027. Finance said depreciation will be higher (low single digit growth at least for 2027) and rising costs will pressure gross margins though EBITDA should remain healthy.
"We are currently running at full capacity, so, we said this year will be somewhere at the $300 million range." — Jason Wang (CEO)