Please ensure Javascript is enabled for purposes of website accessibility

Why United Microelectronics Stock Gained Today

By Evan Niu, CFA – Updated Oct 8, 2020 at 1:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The contract chip manufacturer reported monthly sales for September.

What happened

Shares of United Microelectronics (UMC 0.14%) were up by 4% as of 1 p.m. EDT today after the company reported monthly sales figures for September. The stock was up as much as 13% in the morning, setting a fresh 52-week high.

So what

United Microelectronics reported a 34% jump in September revenue to 14.5 billion new Taiwan dollars, or approximately $507.2 million based on current exchange rates. That was the highest monthly growth that the contract chip manufacturer has reported since March. The report brings United Microelectronics total revenue for the third quarter to NT$44.9 billion, which was mostly in line with the consensus estimate.

Silicon wafer

Image source: Getty Images.

Larger rival Taiwan Semiconductor (TSM -1.43%) also reported monthly sales figures, with revenue in September increasing 25% to NT$127.6 billion.

Now what

Chip manufacturers typically see revenue ramp up seasonally ahead of the fall when many tech companies usually release new consumer electronics products for the holiday shopping season.

On the last earnings call, United president Jason Wang said wafer shipments and average selling prices in the third quarter should remain about flat. Gross margin is expected to be around 20%, capacity utilization should be in the mid-90% range, and the company expects $1 billion in capital expenditures this year. United Microelectronics is planning to further expand production capacity in 2021 for numerous process technologies that are seeing high demand, such as its 8-inch wafers.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Stocks Mentioned

United Microelectronics Stock Quote
United Microelectronics
UMC
$7.41 (0.14%) $0.01
Taiwan Semiconductor Manufacturing Stock Quote
Taiwan Semiconductor Manufacturing
TSM
$81.50 (-1.43%) $-1.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.