Fitch Ratings has changed the outlook on Taiwan-based United Microelectronics' (TPE:2303) long-term foreign and local currency issuer default ratings to stable from positive, while affirming the ratings at BBB+.
The rating agency also kept the company's AA-(twn) national long-term rating.
The outlook change considers weaker recovery prospects in demand for non-AI applications, near-term concerns for the company's 8-inch fab utilization, volatility from US tariff policies, and unfavorable currency dynamics, Fitch said in a Monday release.
Still, the company's ratings are anchored by its robust business profile as the world's third-largest pure-play foundry, accounting for 5% of revenue last year.
Fitch expects a more moderate improvement in the company's profitability, with the EBITDA margin likely remaining below 45% over the next two years.
The company will also maintain a conservative capital structure with a net cash position, and is expected to have declining capital expenditures in the next few years, the rating agency said.
Notable shifts in the company's mid-cycle EBITDA margin, pre-dividend free cash flow, or EBITDA leverage could prompt Fitch to carry out rating actions in the future.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.