Semiconductor foundry United Microelectronics on Tuesday beat analyst expectations for the fourth quarter. However, UMC stock fell amid a rough day for tech stocks overall.
The Taiwan-based company earned 24 cents per U.S. share on sales of $2.14 billion in the December quarter. Analysts expected UMC earnings of 23 cents per U.S. share on sales of $2.08 billion, according to FactSet. In the year-earlier period, UMC earned 17 cents per American depositary share on sales of $1.62 billion.
On the stock market today, UMC stock plunged 7.2% to close at 10.13.
UMC stock notched a record high 12.68 on Dec. 1 before the current market correction.
UMC Stock Ranks First In Group
According to IBD Stock Checkup, UMC stock ranks first in IBD's Semiconductor Manufacturing industry group. It has a best-possible IBD Composite Rating of 99. The group ranks No. 30 out of 197 industry groups that IBD tracks.
UMC runs 12 chip fabrication plants, known as fabs, located in Taiwan, China, Japan and Singapore.
In a news release, UMC said its sales were strong in the fourth quarter thanks to such megatrends as 5G wireless, artificial intelligence, Internet of Things and growth in automotive chips.
"Looking ahead into Q1 2022, we anticipate that demand across all nodes in UMC's addressable markets will continue to outpace supply," said Jason Wang, UMC co-president. "Our growth in the long term is supported by industry megatrends."
Wedbush Securities analyst Matt Bryson reiterated his outperform rating on UMC stock after the earnings report.
"With UMC continuing to produce at levels well above expected capacity (and more importantly with worldwide foundry capacity remaining tight as we continue to encounter kitting issues throughout the supply chain), we see beneficial pricing trends remaining in place through first-half 2022 (and likely through all of 2022)," Bryson said. That should translate to elevated profit margins and earnings vs. Street expectations, he said.
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