UMC - United Microelectronics: A Value Stock With AI Exposure

2024-05-03 15:25:03 ET

Summary

• United Microelectronics Corporation is a semiconductor company that expects to address the edge AI market in the next few years.
• UMC is currently trading at a cheaper price compared to other semiconductor companies, presenting an opportunity for value investors to gain artificial intelligence exposure at a reasonable price.
• UMC is dealing with macro headwinds and geopolitical risks, but the market mainly seems concerned that it won't address the main AI semiconductor market while overlooking edge AI potential.

United Microelectronics Corporation ( UMC ) is a semiconductor company offering an interesting proposition for value investors who want some exposure to the upside of artificial intelligence while maintaining a fundamental margin of safety, if they're willing to take on some geopolitical risks. Given the surge of money into AI stocks, it would be hard to put together a list of AI value stocks, at least using normal value investing criteria. But UMC could be one.

Investment Thesis

UMC is currently available much cheaper than I would expect to see a semiconductor company trading, and I believe there are two reasons for that. First, they don't make semiconductors used in the GPUs that are being bought up to fuel AI growth. Second, being headquartered in Taiwan presents geopolitical risks with a lot of speculation over a possible invasion by China in the coming years....

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