AI demand has not cooled: United Microelectronics Corp. Sponsored ADR (UMC.US) saw its revenue soar 19% in July, confirming the expansion of computing power chains into mature processes.

As the global semiconductor sector experiences a sharp correction due to concerns over deleveraging and high valuations, the latest monthly sales data released by the wafer foundry giant United Microelectronics Corporation (UMC.US) provides a boost to panicked Wall Street investors. The company reported an unaudited consolidated revenue of NT$23.84 billion for July, a significant year-on-year increase of 18.98% compared to NT$20.04 billion in July 2022. For the first seven months of this year (January to July), United Microelectronics Corp. Sponsored ADR achieved a cumulative consolidated revenue of NT$153.61 billion, marking a year-on-year growth of 12.41%. Emerging from a slump: Revenue growth shows a clear "steep slope" By closely analyzing the recent monthly data trajectory, it is evident that United Microelectronics Corp. Sponsored ADRs business recovery exhibits strong characteristics of slope acceleration. Following last year's downturn and a low single-digit year-on-year growth in the first quarter of this year, the monthly revenue growth rate for United Microelectronics Corp. Sponsored ADR saw a rapid increase starting in April (11% year-on-year in April, 17.8% in May, and nearly 23% in June), maintaining a high level of nearly 19% in July. This series of accelerated growth data indicates that the mature process supply chain has completely shaken off the shadow of several quarters of inventory destocking at the end-user level. With the dual drivers of the traditional consumer electronics peak season and the explosive demand for AI peripheral chips in the second half of the year, the cyclical turning point for the wafer foundry industry has been firmly established. July data confirms Q2 full load guidance, capital expenditures raised against the trend The strong performance of July sales data perfectly corroborates the optimistic forward guidance provided by United Microelectronics Corp. Sponsored ADR in its second quarter report. During the second quarter conference call, United Microelectronics Corp. Sponsored ADR's management predicted that, driven by strong downstream demand recovery, wafer shipments would achieve high single-digit growth quarter-on-quarter in the third quarter, with capacity utilization rising further from 85% in the second quarter to above 90%. From the impressive revenue report in July, it appears that this full load expectation is rapidly materializing. In terms of financial quality, United Microelectronics Corp. Sponsored ADR's operating profit in Q2 increased by 38.2% year-on-year to NT$14.95 billion, with the gross profit margin rising to 32.5%. Due to strong confidence in orders for the second half of the year and the medium to long term, United Microelectronics Corp. Sponsored ADR has significantly raised its capital expenditure budget for 2026 by 25% to US$2 billion, and approved an expansion plan of approximately US$5 billion for the next few years to gradually expand its facilities in Singapore and Tainan. Focus shift: AI computing power chain is expanding comprehensively towards mature processes In the face of the market's previous pessimistic hypothesis that demand for AI computing infrastructure has peaked, the growth data from United Microelectronics Corp. Sponsored ADR in July provides a clear industry explanation, prompting the US stock market to reassess the ecological value of mature processes in the AI era. Analysts point out that the current AI arms race has evolved from merely competing for GPU core computing power to a contest constrained by physical infrastructure. While Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR monopolizes advanced processes for top AI GPUs, the surging power consumption and transmission bottlenecks of AI data centers have directly triggered explosive demand for power management chips (PMICs), BCD processes, microcontrollers, high-end sensors, and silicon photonic interconnect chips. These critical peripheral areas are where United Microelectronics Corp. Sponsored ADR excels. The Q2 report from United Microelectronics Corp. Sponsored ADR shows that its revenue from 22nm processes has surged to a historical high of 17.5%, and 12-inch silicon photonic chips have achieved their first mass production deliveries. United Microelectronics Corp. Sponsored ADR CEO Stephen Wang previously stated that the company expects AI-related revenue to reach US$300 million this year and to surpass US$1 billion within three years. Real demand vs. market devaluation Recently, impacted by macro liquidity tightening and high-leverage position liquidations, the semiconductor sector has suffered significant setbacks; however, the accelerated growth in July sales data from United Microelectronics Corp. Sponsored ADR, along with the strong performance outlook of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, SK Hynix, and Seagate, forms a four-way cross-validation. The data indicates that there are no signs of decline in AI infrastructure at the physical level and electronic industry demand; the current market crash is more rooted in deleveraging and short-term emotional anxiety over return on investment (ROI). With the arrival of the good start data in July, US investors will closely watch whether United Microelectronics Corp. Sponsored ADR can sustain this growth slope in the third quarter, as well as how higher capacity utilization may further drive the companys overall pricing power and gross profit margin.