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.