UMC - United Microelectronics: Good But Not As Good As Competitors

• As a semiconductor foundry company, we analyzed its wafer ASP trend and forecasted its wafer pricing to grow by 20% in 2022 amid the tight industry supply.
• We forecasted its wafer capacity growth and determined its $5 bln capacity expansion will not produce meaningful incremental profits, but UMC to still benefit from rising ASPs.
• The company’s revenue by process nodes shows it is focused on the matured process nodes with key customers including Texas Instruments, MediaTek and Realtek.
• While we find shares of UMC attractive at these price levels, we expect them to face tough competition from Samsung and TSMC.

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