UMC (UMC) Q4 2025: 22nm Revenue Jumps 31% as Advanced Packaging Pipeline Expands
UMC posted a measured Q4, with 22nm revenue up 31% QoQ, underlining its specialty node strategy and discipline in pricing amid modest utilization. Management signals a pivotal year ahead as advanced packaging and silicon photonics ramp, while a more favorable pricing environment and diversified geographic footprint position UMC to outgrow its addressable foundry market in 2026. Investors should monitor the margin trajectory as depreciation and inflationary pressures persist, but product mix and specialty technology momentum offer durable upside.
Summary
- Specialty Node Mix: 22nm and 28nm platforms drive product differentiation and margin resilience.
- Growth Catalysts Emerging: Advanced packaging and silicon photonics tape-outs set up 2027 revenue inflection.
- Margin Watch: High depreciation and raw material costs offset by pricing discipline and cost controls.
Performance Analysis
UMC delivered a 4.5% sequential revenue increase in Q4, driven by favorable FX and robust demand for 22nm and 28nm platforms, which now constitute 36% of total revenue. Utilization held steady at 78%, while gross margin improved to 30.7%, reflecting improved product mix but also aided by foreign exchange. For the full year, revenue grew 2.3% and net income margin landed at 17.6%, with EPS declining due to higher costs and depreciation. Geographically, North America’s share of revenue continued its decline, while Asia and Europe picked up share. ASPs (average selling prices) remained stable throughout 2025, with management signaling a more constructive pricing environment into 2026.
Specialty technologies—embedded high voltage, non-volatile memory, and BCD (bipolar-CMOS-DMOS)—now comprise roughly half of total revenue, with high voltage alone representing 30% of that specialty mix. UMC’s consumer segment rose to 31% of annual revenue, up three points YoY, while the IDM (integrated device manufacturer) customer base increased its share to 19% of full-year revenue, reflecting the company’s strategic focus on diversified end markets and customers.
- Product Mix Optimization: 22nm revenue up 31% QoQ, now over 13% of Q4 revenue, highlighting UMC’s execution in specialty nodes.
- Stable Utilization, Flat Capacity: Utilization at 78%, with capacity flat QoQ and a slight annual decline due to maintenance.
- Regional Shift: North America share dropped to 22% for 2025, as Asia and Europe gain traction.
UMC’s financial health remains solid, with cash exceeding 110 billion NT and equity at 380 billion NT. However, the margin outlook is clouded by rising depreciation, with 2026 CapEx guided slightly lower but still at a significant $1.5 billion, reflecting continued investment in technology and geographic diversification.
Executive Commentary
"With the 22 and 28-nm segment, 22-nm, revenue increased 31% quarter-on-quarter to a record high, accounting for more than 13% of total fourth-quarter revenue. Looking at the four-year, UMC delivered solid performance in 2025, with Sherman increasing 12.3% and revenue in U.S. dollar up 5.3% year-on-year. Going into the first quarter of 2026, we expect waiver demand to remain firm. UMC is confident that 2026 will be another growth year as a tape-out on our 22-nm platform accelerate, and other new solutions continue to gain business traction."
Jason Wong, President
"For the first quarter guidance, which is the high 20s, it's mainly due to the higher cost, especially the higher depreciation expenses, as I mentioned. It will grow by low 10 in the full year of 2026. As for 2026, we will continue to cope with higher depreciation expenses as well as the other inflationary pressures for our production of raw material and other costs. To mitigate and cope with the headwinds, we will continue with our cost reduction efforts and also all the activities to improve our productivity and drive operation efficiencies."
Chi-Dung Liu, Chief Financial Officer
Strategic Positioning
1. Specialty Node Leadership and Product Mix
UMC’s focus on specialty nodes, particularly 22nm and 28nm, is yielding outsized growth and margin stability. Management highlighted 22nm as a core growth engine, with sequential revenue up 31% and a growing share of the revenue mix. This move away from commoditized segments allows for pricing power and differentiation, especially as AI and connectivity applications proliferate.
2. Advanced Packaging and Silicon Photonics Pipeline
Advanced packaging and silicon photonics are set to become new growth catalysts, with more than 20 tape-outs expected in 2026 and revenue impact projected for 2027. UMC’s strategy is to integrate advanced packaging (2.5D, 3D, wafer-to-wafer hyperbonding) with specialty technologies, targeting high-value applications in AI, networking, and automotive. The collaboration with IMEC and the focus on 12-inch silicon photonics platforms provide a competitive edge over peers operating at smaller wafer sizes.
3. Geographic Diversification and Capacity Expansion
UMC’s investments in Singapore, Taiwan, Japan, and the US underpin its geo-diversification strategy. The Singapore F12I facility’s Phase III expansion is now operational, supporting customer supply chain diversification. Capacity expansion in Singapore will begin ramping in H2 2026 and into 2027, with a modest overall capacity increase of 1.2% YoY for 2026. This global footprint is increasingly important as customers seek supply chain resilience.
4. Pricing Discipline and Customer Engagement
UMC expects a more favorable ASP environment in 2026, enabled by disciplined pricing, product mix improvement, and reduced reliance on commoditized products. Management is executing a nuanced pricing approach: some customers see price increases, while strategic customers receive temporary adjustments to support share gains. This dynamic, flexible pricing model is anchored in value delivery and market conditions.
5. Partnerships and Technology Collaboration
UMC’s partnership with Intel on 12nm is progressing, with PDK and IP delivery slated for 2026 and product tape-outs in 2027. This collaboration is designed to strengthen UMC’s US presence and broaden its technology portfolio. The company remains open to extending such partnerships to more advanced nodes if execution and customer demand justify it.
Key Considerations
UMC’s Q4 and full-year results reflect a business at the intersection of specialty technology momentum and cyclical cost pressures. The company’s ability to sustain outperformance will depend on operational execution, product mix, and the timing of new growth drivers.
Key Considerations:
- Specialty Technology Outperformance: 22nm and 28nm nodes are driving growth and differentiation, key for margin defense as legacy nodes commoditize.
- Advanced Packaging Revenue Ramp: Over 20 tape-outs in 2026 signal a major revenue catalyst in 2027, with broad applicability across AI, automotive, and consumer.
- Cost Structure Headwinds: High depreciation and raw material inflation will pressure margins, requiring continued cost discipline and operational efficiency improvements.
- Pricing Flexibility: UMC’s adaptive pricing model supports customer retention and share gains, but the true magnitude of ASP uplift will track with utilization and market tightness.
- Geographic and Customer Diversification: Expanding footprint and IDM mix reduce concentration risk and position UMC for global supply chain shifts.
Risks
Margin compression remains a material risk as depreciation and input costs rise, especially if utilization does not rebound above the mid-70% range. Pricing power may be tested if supply-demand dynamics shift or if competitors become more aggressive. The timing and scale of advanced packaging and silicon photonics revenue are not guaranteed, and execution risk is elevated given the technology and customer ramp complexity. Macro and memory market volatility could also impact key end markets.
Forward Outlook
For Q1 2026, UMC guided to:
- Flat wafer shipments and firm ASP in US dollars
- Gross margin in the high 20% range
- Capacity utilization in the mid-70% range
For full-year 2026, management guided:
- CapEx of $1.5 billion, a slight YoY decrease
- Low-teen percent increase in depreciation expenses
Management flagged:
- Second half of 2026 expected to outperform the first half, driven by new technology ramps and project tape-outs
- Pricing environment expected to remain favorable, though magnitude will depend on utilization and market dynamics
Takeaways
UMC’s strategy is to double down on specialty nodes and advanced packaging while maintaining pricing discipline and geographic diversification. The company’s ability to convert tape-out momentum into revenue growth and margin stability will be the key investor watchpoint in 2026 and 2027.
- Specialty Node Execution: 22nm and 28nm growth is driving mix shift and ASP resilience, but continued outperformance depends on sustaining customer adoption and maintaining technology lead.
- Advanced Packaging Ramp: Over 20 new tape-outs and deepening customer engagement position UMC for a significant revenue step-up in 2027, but execution risk remains as the company scales new platforms.
- Margin and Cost Management: Investors should closely monitor the interplay of pricing, utilization, and cost inflation as the margin environment remains volatile in the near term.
Conclusion
UMC’s Q4 results and 2026 outlook highlight a business in transition, leveraging specialty node leadership and new technology ramps to offset cyclical cost and utilization pressures. The company’s disciplined pricing, customer diversification, and advanced packaging investments set the stage for outperformance, but margin management and execution on new growth vectors will be decisive for long-term value creation.
Industry Read-Through
UMC’s commentary and results reinforce several industry-wide trends: Specialty node foundries are gaining pricing power as legacy capacity tightens and AI-related demand drives mix shift. Advanced packaging and silicon photonics are set to become mainstream growth engines, with 2027 shaping up as a pivotal year for revenue impact across the industry. The shift toward geographic diversification and customer mix broadening is accelerating as supply chain risk and customer requirements evolve. Competitors focusing on mature nodes and differentiated technology will be best positioned to capture margin and share as the next cycle unfolds.