United Microelectronics UMC recently announced that it has signed a Corporate Power Purchase Agreement with Fengmiao I Offshore Wind Farm, marking a significant milestone in its journey toward sustainability. 

Under this agreement, UMC will purchase more than 30 billion kilowatt-hours of power from the wind farm over the next 30 years, marking the largest renewable energy transaction in the company’s history. 

This move is part of United Microelectronics’ ambitious roadmap to achieve 50% renewable energy usage by 2030 and reach net zero emissions with 100% renewable energy by 2050. 

UMC is committed to reducing carbon emissions through proactive actions and investments in net-zero technologies, having already exceeded its 2030 emissions reduction target by achieving a 26% reduction in scope 1 and scope 2 greenhouse gas emissions from 2020 levels. UMC is now aiming for an even more ambitious 42% reduction by 2030.

UMC Benefits From Low-Carbon Supply Chain Achievement

The latest move is in sync with UMC’s focus on accelerating its transition to net zero emissions through proactive carbon reduction and increased use of renewable energy.

In line with this, UMC recently held its Low-Carbon Supply Chain Awards Ceremony, recognizing 16 suppliers for their efforts in reducing greenhouse gas emissions, with a total reduction of 2.64 million tons since the launch of its Supply Chain Greenhouse Gas Inventory Initiative in 2022. 

The initiative, which supports suppliers in measuring and lowering emissions, builds on UMC’s earlier Triple R League program to promote resource reduction, reuse and recycling.

UMC Benefits From a Strong Partner Base

UMC’s expanding partner base, which includes Intel INTC, Infineon IFNNY and Cadence, has been a major growth driver.

United Microelectronics’ collaboration with Intel aims to develop a 12-nanometer semiconductor process platform, leveraging Intel’s U.S. manufacturing capacity and UMC’s expertise in mature nodes to address high-growth markets and enhance supply chain resilience.

The collaboration with Infineon expands automotive microcontroller production at UMC’s Singapore fab, leveraging Infineon’s eNVM (embedded non-volatile memories) technology. As the automotive market grows, this partnership ensures UMC meets the rising demand for automotive semiconductors.

UMC’s Earnings Estimates Show Mixed Trend

For the fourth quarter of 2024, the Zacks Consensus Estimate for UMC revenues is pegged at $1.88 billion, indicating a year-over-year increase of 44.77%.

The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at 17 cents per share, down 23% in the past 30 days.

United Microelectronics’ expanding partner base and renewable energy initiatives, which are driving progress toward net-zero emissions and a low-carbon supply chain, are noteworthy.

The company’s strong demand for advanced technology products like 22 nm and 28 nm solutions is also acting as a tailwind for the company.

However, the appreciation of the New Taiwan (NT) dollar against the U.S. dollar is expected to lead to a decline in reported NT dollar revenues for the fourth quarter of 2024, which could hurt UMC’s financial results.

UMC Shares Underperformed Peers and Sector

UMC shares have lost 22.3% in the year-to-date (YTD) period against the Zacks Electronics - Semiconductors industry and the broader Zacks Computer & Technology sector’s return of 65.4% and 34.8%, respectively.

United Microelectronics has also underperformed its peers, such as Toshiba and Taiwan Semiconductor TSM, which offer similar semiconductor manufacturing services. Taiwan Semiconductor has returned 88% YTD, whereas Toshiba has lost 7.9% over the same time frame. 

The underperformance can be attributed to intense competition in the semiconductor foundry service market, rising supply-chain constraints due to geopolitical tensions and higher inflationary costs.

United Microelectronics currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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