United Micro, the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst Mike Yang from Bank of America Securities downgraded the rating on the stock to a Sell and gave it a $6.20 price target.
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Mike Yang has given his Sell rating due to a combination of factors impacting United Microelectronics Corp. (UMC). One of the primary reasons is the lack of significant increases in average selling prices (ASP) and the anticipated pressure on profit margins extending into 2026-27. This has led to a reduction in the earnings per share (EPS) estimates for the fiscal years 2026-27 by 8-16%, and a decrease in the price objective to NT$37 from NT$49, based on a revised valuation multiple of 11 times the 2026 estimated price-to-earnings ratio.
Another critical factor influencing the Sell rating is the intensifying competition from Chinese companies, particularly Hua Hong Semiconductor, which has matched UMC’s revenue scale in the 90nm wafer segment and is expected to surpass UMC in the 65nm segment as more Chinese customers opt for domestic foundries. Additionally, the stagnant demand in non-artificial intelligence sectors and the anticipated increase in raw material costs are likely to further squeeze UMC’s gross margins, making a significant ASP increase unlikely before 2027, when the potential ramp-up of 12nm production may occur.
UMC’s price has also changed slightly for the past six months – from $7.710 to $7.240, which is a -6.10% drop .