United Microelectronics Corp. Sponsored ADR (UMC.US) welcomes dual catalysts: accelerated PIC business + collaboration with Intel Corporation to develop 12 nanometers, as institutions engage in a tug-of-war between bullish and bearish sentiments.

GF SEC expects that the stock of the wafer foundry giant United Microelectronics Corp. (UMC.US) will strengthen, driven by the development of its Photonic Integrated Circuit (PIC) business. GF SEC analyst Jeff Pu stated in a report to investors: Due to comments from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSMC.US) indicating that there is no shortage of mature processes, the stock price of United Microelectronics Corp. Sponsored ADR lagged behind the Taiwan Weighted Stock Index (Taiex) by 26% in the second half of July. However, it has shown a sideways trading trend so far this month, as it adjusts to the company's higher depreciation guidance and the previously crowded long positions. Nevertheless, we now expect its high-margin PIC business to accelerate, mainly driven by Hyperlight [which may have made significant progress in relation to Alphabet Inc. Class C] and TeraHop. We anticipate wafer shipments will grow to 20,000 per month by Q4 2027 and 40,000 per month by Q4 2028, with gross margins significantly above the companys overall level. GF SEC maintains a Buy rating on the stock and raises its target price from NT$135 to NT$160 (approximately US$5). Each American Depository Share (ADS) of United Microelectronics Corp. Sponsored ADR listed on the New York Stock Exchange corresponds to five shares of common stock traded in Taiwan. United Microelectronics Corp. Sponsored ADR is collaborating with Intel Corporation to jointly develop and manufacture a 12-nanometer process, with production expected to commence next year at Intel Corporation's foundry in Arizona. Jeff Pu pointed out: Regarding Intel Corporation, management has reaffirmed that the collaboration plan remains on track, with tape-out expected to be completed on Intel's 12 process in 2027, and we anticipate that capacity will not be limited to a single phase. Overall consensus remains "Sell." The bullish camp, represented by GF and Arete Research, has successively upgraded the rating for United Microelectronics Corp. Sponsored ADR, but the bears' resistance ensures that overall consensus remains cautious. United Microelectronics Corp. Sponsored ADR has become one of the most contentious subjects on Wall Street regarding how "mature process wafer foundries should be revalued." Bernstein maintained its "Sell" rating on July 28, with a target price of $13.60, implying approximately 28.98% downside based on the stock price at that time. The firm had consecutively maintained its "Sell" position and a target price of $7.40 on July 7 and April 13, making it the most resolute bear among institutions covering United Microelectronics Corp. Sponsored ADR. Data from S&P Global shows that four analysts' consensus rating for United Microelectronics Corp. Sponsored ADR is "Sell," with a 12-month average target price of $18.492. The bears' main concerns are threefold: First, the Q2 net profit attributable to shareholders of NT$42.26 billion includes a one-time contribution of approximately NT$30.05 billion from investment income, and the operational momentum of the main business needs observation; second, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's assessment that "mature process nodes are no longer in short supply" weakens United Microelectronics Corp. Sponsored ADR's bargaining power; third, depreciation expenses before 2027 are expected to grow at a "low double-digit" percentage, and increased capital expenditures are likely to suppress profit release in the short term. From July 31 to August 24, the stock price of United Microelectronics Corp. Sponsored ADR fluctuated between $17.07 and $20.85, closing at $18.83 on August 24, having initially surged to $19.50 before pulling backreflecting the intense debate in the market over the aforementioned discrepancies. Since Arete upgraded its rating on August 10, bullish catalysts have gradually accumulated; however, Bernstein's sell rating and the overall "Reduce" consensus indicate that the stock price has not yet formed a unified expectation regarding the PIC business.